Calculate the recoverable amount for each of the three items

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Question - Supermax Ltd applies the cost model to record 'plant and equipment' in its books. You are assigned a task to assess the valuation of the following three different items of its plant and equipment of Supermax Ltd. at the reporting date ending 30th June 2021.

Asset

Carrying amount $

Fair value $

Costs of disposal $

Value in use $

A

200,000

210,000

6,000

220,000

B

100,000

90,000

2,000

96,000

C

160,000

70,000

4,000

164,000

Required - You are required to:

(a) How is an impairment loss calculated in relation to a single asset accounted for?

(b) Calculate the recoverable amount for each of the three items of plant and equipment.

(c) Prepare the necessary journal entries to record adjustments for impairment, where necessary.

Reference no: EM132988889

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