Reference no: EM132765559
Question: At 30 June 2018, Cosmo Ltd reported the following cash-generating unit:
Land $ 50 000
Plant 500 000
Accumulated depreciation (150 000)*
Goodwill 50 000
Inventory 100 000
Accounts receivables 30 000
Cash 5 000
Accounts payables 20 000
The receivables held by Cosmo Ltd were all considered to be collectable. The inventory was measured in accordance with AASB 102 Inventories. All items of property, plant and equipment are measured using the cost model.
At 30 June 2018, the recoverable amount of the cash-generating unit was $512 000.
For the period ending 30 June 2019, the depreciation charge on plant was $45 000. If the plant had not been impaired the charge would have been $50 000.
At 30 June 2019, the recoverable amount of the unit was calculated to be $17 800 greater than the carrying amount of the assets of the unit. As a result, Cosmo Ltd recognized a reversal of the previous year's impairment loss.
Required: Prepare the journal entries relating to impairment at 30 June 2018 and 30 June 2019.
Note: You are required to show all workings and round up to the nearest dollar. Narrations are not required.
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