On 30 June 2021, Hot Ltd determined that due to a downturn in the market for...

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On 30 June 2021, Hot Ltd determined that due to a downturn in the market for suitcases, that impairment testing needed to be conducted on the assets held in the Travel Products Division. Hot Ltd tests for impairment on assets by grouping each of its divisions into cash generating units (CGU). On 30 June 2021 the net assets in the Travel Products Division were as follows: Cash Inventory Building $ 30 June 2021 45,000 80,000 110,000 160,000 (100,000) Accumulated depreciation - building(10,000) Plant & Equipment (P&E) Accumulated depreciation - P&E Goodwill Accounts payable Provision for employee benefits Net assets 15,000 (30,000) (40,000) $230,000 The building was determined to have a fair value of $90,000 on 30 June 2021. Hot Ltd determined a recoverable amount for this CGU on 30 June 2021 to be $260,000. Required: Prepare the necessary journal entry for impairment loss on the Travel Products Division Ltd's as at 30 June 2021. (10 marks) On 30 June 2021, Hot Ltd determined that due to a downturn in the market for suitcases, that impairment testing needed to be conducted on the assets held in the Travel Products Division. Hot Ltd tests for impairment on assets by grouping each of its divisions into cash generating units (CGU). On 30 June 2021 the net assets in the Travel Products Division were as follows: Cash Inventory Building $ 30 June 2021 45,000 80,000 110,000 160,000 (100,000) Accumulated depreciation - building(10,000) Plant & Equipment (P&E) Accumulated depreciation - P&E Goodwill Accounts payable Provision for employee benefits Net assets 15,000 (30,000) (40,000) $230,000 The building was determined to have a fair value of $90,000 on 30 June 2021. Hot Ltd determined a recoverable amount for this CGU on 30 June 2021 to be $260,000. Required: Prepare the necessary journal entry for impairment loss on the Travel Products Division Ltd's as at 30 June 2021. (10 marks)

Answer rating: 100% (QA)

To determine the impairment loss on the Travel Products Division of Hot Ltd as of ... View the full answer