Reference no: EM132659123

The business operations of many entities have been seriously affected by the rapid global spread of COVID-19 and related government actions. Easy Tours Sdn. Bhd. (ETSB), a travel agency is one of the many businesses that is suffering the consequences of this pandemic and the lockdowns by nations worldwide that has brought the tourism industry to a halt.

As such, on the advice of its auditors, the assets of ETSB were tested for impairment for the year ended 31 May 2020, as required by IAS 36 Impairment of assets.

The carrying value of the assets of ETSB as a single cash generating unit at 31 May 2020 was as follows:

Allocated goodwill 30,000
Building 750,000
Office equipment 50,000
Cash at Bank 30,000
Total 860,000

At the same date, it was estimated that the recoverable amount of the above cash generating unit was RM650,000.

Required:

Problem 1: Calculate the impairment loss for ETSB and show how it is to be allocated to the assets in the cash generating unit of Easy Tours Sdn. Bhd. in accordance with IAS 36 Impairment of Assets.