Part 4: Venus Ltd has identified an indication of impairment and is conducting an impairment review....

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Part 4: Venus Ltd has identified an indication of impairment and is conducting an impairment review. The carrying amount of cash-generating unit is as follows on 31 Dec, 2018: £ Goodwill 700,000 Property 1,500,000 Plant and equipment 1,200,000 Computers 500,000 Patents 200,000 Net current assets (net realizable value) 560,000 4,660,000 The whole of the company is considered to be a single cash-generating unit (CGU). If a company continues its operations, it is estimated to receive £600,000 net cash- flows annually at the end of the year for the duration of next 5 years. The discount rate is calculated to be 7%. Fair value less cost to sell for CGU is estimated to be £2,200,000. The net realizable value of the property is £900,000 only. Patents are worthless now due to discontinuation of one of the product lines. Note 1: Discount and Annuity Table Discount rate at Annuity at 7% 0.935 1.808 2.624 3.387 4.1 7% Y1 0.935 Y2 0.873 Y3 0.816 Y4 0.763 Y5 0.713 Part 4: Venus Ltd has identified an indication of impairment and is conducting an impairment review. The carrying amount of cash-generating unit is as follows on 31 Dec, 2018: £ Goodwill 700,000 Property 1,500,000 Plant and equipment 1,200,000 Computers 500,000 Patents 200,000 Net current assets (net realizable value) 560,000 4,660,000 The whole of the company is considered to be a single cash-generating unit (CGU). If a company continues its operations, it is estimated to receive £600,000 net cash- flows annually at the end of the year for the duration of next 5 years. The discount rate is calculated to be 7%. Fair value less cost to sell for CGU is estimated to be £2,200,000. The net realizable value of the property is £900,000 only. Patents are worthless now due to discontinuation of one of the product lines. Note 1: Discount and Annuity Table Discount rate at Annuity at 7% 0.935 1.808 2.624 3.387 4.1 7% Y1 0.935 Y2 0.873 Y3 0.816 Y4 0.763 Y5 0.713

Answer rating: 100% (QA)

Impairment loss Carrying value of CGU recoverable value of the CGU Recoverable value of the CGU high... View the full answer