Reference no: EM132641531
Question - One of the cash-generating units of Twin Corporation is that associated with the manufacture of wine barrels. At 31 December 2018, Twin Corporation believed, based on an analysis of economic indicators, that the assets of the unit were impaired. The carrying amounts the assets of the unit at 31 December 2018 were:
Cash 20,000
Receivables, net (allowance for doubtful accounts of P5,000) 35,000
Inventory 80,000
Building, net (depreciated at P60,000 per annum) 240,000
Machinery, net (depreciated at P45,000 per annum) 180,000
Goodwill 15,000
Twin Corporation determined the value in use of the unit to be P535,000. The receivables were considered to be collectible, except those considered doubtful.
During 2019, Twin Corporation increased the depreciation charge on buildings to P65,000 per annum and to P50,000 per annum for factory machinery. The inventory on hand at 31 December 2018 was sold by the end of 2019. At 31 December 2019, Twin Corporation, due to a return in the market to the use of traditional barrels for wines and an increase in wine production, assessed the recoverable amount of the cash-generating unit to be P20,000 greater than the carrying amount of the unit. What is the impairment loss?
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