Reference no: EM132513947
Cherry Lid acquired all the assets and liabilities of Hazel Lid on 1 January 2010. Hazel Lid.'s activities were run through three separate businesses, namely Sandstone Unit, the Sapphire Unit and the Silverton Unit.
These units are separate cash-generating units.
Cherry Lid allowed unit managers to effectively operate each of the units, but certain central activities were run through the cooperate office. Each unit were allocated a share of the goodwill acquired, as well as a share of the corporate office.
At 31 December 2010, the assets allocated to each unit were as follows:
Sandstone $ Sapphire $ Silverton $
Factory 820 750 460
Accumulated (420) (380) (340)
depreciation
Land 200* 300** 150*
Equipment 300 410 560
Accumulated (60) (320) (310)
depreciation
Inventory 120 80 100*
Goodwil 40 50 30
Corporate property 200 150 120
- *these assets have carrying amount less than fair valve less costs to sell.
- **this asset has a fair valve less costs to sell of $293
Cherry Lid determined the valve in use of each of the business units at 31 December 2010.
Sandstone $ 1170
Sapphire 900
Silverton 800
31 December 2010.
Required:
Question 1: Using knowledge of IAS 36: Determine how Cherry Lid should allocate any impairment loss at