Noble Ltd has a business operation that represents a separate cash-generating unit. At 30 June 2021,...

 

Transcribed Image Text:

Noble Ltd has a business operation that represents a separate cash-generating unit. At 30 June 2021, the carrying amounts of the assets of the business, valued pursuant to the cost model, are as follows: Assets: $ Cash 21,000 Equipment 400,000 Less: accumulated depreciation (50,000) Land 150,000 Inventory 2,000 Goodwill 20,000 Carrying amount of cash-generating unit 543,000 The directors of Noble Ltd estimate that, at 30 June 2021, the fair value less costs to sell of the business amounts to $440,000, while the value in use of the business is $490,000. The inventory was recorded at lower of cost and net realisable value. The land had a fair value less costs to sell of $135,000. Required: Determine how Noble Ltd should account for the results of the impairment test at 30 June 2021 and prepare any necessary journal entries. Show all workings and provide explanations to support your answer where necessary. Noble Ltd has a business operation that represents a separate cash-generating unit. At 30 June 2021, the carrying amounts of the assets of the business, valued pursuant to the cost model, are as follows: Assets: $ Cash 21,000 Equipment 400,000 Less: accumulated depreciation (50,000) Land 150,000 Inventory 2,000 Goodwill 20,000 Carrying amount of cash-generating unit 543,000 The directors of Noble Ltd estimate that, at 30 June 2021, the fair value less costs to sell of the business amounts to $440,000, while the value in use of the business is $490,000. The inventory was recorded at lower of cost and net realisable value. The land had a fair value less costs to sell of $135,000. Required: Determine how Noble Ltd should account for the results of the impairment test at 30 June 2021 and prepare any necessary journal entries. Show all workings and provide explanations to support your answer where necessary.

Answer rating: 100% (QA)

Step 1 The above case is based on IFRS36 Asset Impairment According to the IAS 36 an asset should be ... View the full answer