Prepare the journal entries accounting for impairment loss

Reference no: EM133083306

Question: Reversal of impairment losses

Saxon Ltd conducted an impairment test at 30 June 2015. As a part of that exercise, it measured the recoverable amount of the entity. considered to be a single cash-generating unit, to be $217600. The carrying amounts of the assets of the entity at 30 June 2015 were:

Equipment	200000
Accumulated depreciation	(40000)
Patent	40000
Goodwill	6400
Inventory	32 000
Receivables	1 600

The receivables held by Saxon Ltd were all considered to be collectable. The inventory was measured in accordance with AASB 102 Inventories.

For the period ending 30 June 2016. the depreciation charge on equipment was $14720. If the plant had not been impaired the charge would have been $20000.

At 30 June 2016. the recoverable amount of the entity was calculated to be $10400 greater than the carrying amount of the assets of the entity. As a result. Saxon Ltd recognised a reversal of the previous year's impairment loss.

Required
Prepare the journal entry(ies) accounting for the impairment loss at 30 June 2015 and the reversal of the impairment loss at 30 June 2016.

Reference no: EM133083306

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