Reference no: EM132531915

The Noble Company operates a factory that makes natural gas boilers. The factory is a cash-generating unit that includes goodwill, buildings, plant and equipment, and various current assets (cash, accounts receivable and inventory). The buildings include an outbuilding that was damaged in a fire on 1 November 2016. The company directors recognised an impairment that was appropriate at the time. However, on 1 August 2017, it was discovered that the damage to the outbuilding was worse than originally thought, and it is now considered to be worthless.

The following information is relevant to the cash-generating unit as at the year-end, 31 December 2017:

Asset                  Carrying amount ($)

Goodwill                 60 000

Building                 440 000

Plant & Equipment       200 000

Net current assets        150 000

Total                          850 000

The following additional information is relevant:

• Net current assets are stated at recoverable amount
• The carrying amount of buildings includes the damaged outbuilding at a carrying amount of $40 000.
• The recoverable amount of the factory as a cash-generating unit is estimated as $720 000, as at 31 December 2017

Question 1: Calculate the impairment loss of the cash-generating unit as at 31 December 2017 in accordance with IAS 36. Journal entries are not required.

Question 2: Find the revised carrying amount of each of the assets in the cash-generating unit after allocating the impairment loss calculated in part (1) to the assets in the cash-generating unit in accordance with IAS 36. Journal entries are not required.