QUESTION 5 You are the financial controller of Chancer plc, a company that prepares its financial...

 

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QUESTION 5 You are the financial controller of Chancer plc, a company that prepares its financial statements to 31 December each year. The following issues need to be resolved before the financial statements for the year ended 31 December 2019 can be finalised. Issue 1: Chancer plc is undertaking an impairment review of assets, with investigations uncovering the following: Asset R has a carrying amount of 60,000, a value in use of 65,000 and a fair value less costs of disposal of 30,000; and Asset S has a carrying amount of 100,000, a value in use of 92,000 and a fair value less costs of disposal of 95,000. Requirement (a) An entity should assess at the end of each reporting period whether there are any indications of impairment to any assets. If there are indications of possible impairment, the entity is required to make a formal estimate of the recoverable amount of the assets concerned. In assessing such indications of a possible impairment, what sources of information should an entity, as a minimum, consider? 5 Marks (b) Explain how Chancer plc should account for Asset R and Asset S in its financial statements for the year ended 31 December 2019 in accordance with extant international financial reporting standards. 5 Marks QUESTION 5 You are the financial controller of Chancer plc, a company that prepares its financial statements to 31 December each year. The following issues need to be resolved before the financial statements for the year ended 31 December 2019 can be finalised. Issue 1: Chancer plc is undertaking an impairment review of assets, with investigations uncovering the following: Asset R has a carrying amount of 60,000, a value in use of 65,000 and a fair value less costs of disposal of 30,000; and Asset S has a carrying amount of 100,000, a value in use of 92,000 and a fair value less costs of disposal of 95,000. Requirement (a) An entity should assess at the end of each reporting period whether there are any indications of impairment to any assets. If there are indications of possible impairment, the entity is required to make a formal estimate of the recoverable amount of the assets concerned. In assessing such indications of a possible impairment, what sources of information should an entity, as a minimum, consider? 5 Marks (b) Explain how Chancer plc should account for Asset R and Asset S in its financial statements for the year ended 31 December 2019 in accordance with extant international financial reporting standards. 5 Marks

Answer rating: 100% (QA)

a An entity as a minimum should consider the following sources of information in assessing indicatio... View the full answer