Reference no: EM132787251

Kukkies Bhd acquired a non-current asset on 1 October 2015 at a cost of RM100,000 which had a useful economic life of ten years and a nil residual value. The asset had been correctly depreciated up to 30 September 2020. On that date the asset was damaged and an impairment review was performed. On 30 September 2020, the fair value of the asset less costs to sell was RM30,000 and the expected recoverable amount is RM32,215.

Problem 1: The non-current asset of Kukkies Bhd is impaired if:

a) its carrying amount exceeds the amount to be recovered through use (or sale) of the asset

b) the amount to be recovered through use (or sale) of the asset exceeds its carrying amount

c) it has been damaged

d) its carrying amount equals the amount to be recovered through use (or sale) of the asset

Problem 2: What amount would be charged to profit or loss for the impairment of this non-current asset for the year ended 30 September 2020?

a) RM17,785

b) RM20,000

c) RM30,000

d) RM32,215

Problem 3: If the fair value less costs to sell cannot be determined, then:

a) The replacement cost is used

b) The recoverable amount is the value in use

c) The asset is not impaired

d) The carrying value of the asset is used