Reference no: EM132554186

One CGU of Denarau Ltd had the following balances at 31 December 2019 (end of financial year).

Accounts Payable                       40,000

Goodwill                                   20,000

Accounts Receivable                 50,000

Inventory                                 30,000

Brandname                                 150,000

Land                                         75,000

Cash                                         10,000

Vehicles (Cost 40,000)                 25,000

The brandname has an indefinite useful life. Vehicles are depreciated at 15% of cost per annum. The CGU generates cash flows with a present value of $310,000. The CGU can be sold for $300,000. One year later, the recoverable amount of the CGU exceeds the carrying amount by $10,000.

Required (Round all answers to the nearest dollar)

Question i Calculate the impairment loss at 31 December 2019

Question ii Allocate the impairment loss calculated in (i) to relevant items.

Question iii Calculate how your answer in (ii) would change if the brandname had a fair value of $140,000.

Question iv For each item in (iii), calculate the maximum values that could be reported if the impairment loss is reversed on 31 December 2020

Question v Suggest how the brandname was acquired and whether it can be revalued.