The Faris Corporation has determined that there may be indicators of impairment for one of their...

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The Faris Corporation has determined that there may be indicators of impairment for one of their assets - an office building that is currently leased out and a cash generating unit (CGU) representing a business unit. Data for the building and CGU follow. The year end is December 31, 20x4. Building CGU Carrying value (20 years remaining, $500,000 residual value) Fair value Costs to sell Future cash flows generated by building (each year to the end of its useful life) a) Land Building Equipment Goodwill Assume a discount rate of 5%. $2,800,000 2,100,000 6% of fair value Carrying Value $1,000,000 2,400,000 900,000 1,000,000 $5,300,000 $170,000 Fair Value less Costs to Sell $1,650,000 1,700,000 550,000 $3,900,000 The CGU's cash flows are expected to be equal to $500,000 for the next five years with a residual value of $2,500,000 at the end of five years. Required - Calculate the amount of impairment loss (if any) for the building and CGU under the assumption that Faris is: i) a publicly accountable entity. Allocate the impairment loss (if any) to the assets of the CGU. The Faris Corporation has determined that there may be indicators of impairment for one of their assets - an office building that is currently leased out and a cash generating unit (CGU) representing a business unit. Data for the building and CGU follow. The year end is December 31, 20x4. Building CGU Carrying value (20 years remaining, $500,000 residual value) Fair value Costs to sell Future cash flows generated by building (each year to the end of its useful life) a) Land Building Equipment Goodwill Assume a discount rate of 5%. $2,800,000 2,100,000 6% of fair value Carrying Value $1,000,000 2,400,000 900,000 1,000,000 $5,300,000 $170,000 Fair Value less Costs to Sell $1,650,000 1,700,000 550,000 $3,900,000 The CGU's cash flows are expected to be equal to $500,000 for the next five years with a residual value of $2,500,000 at the end of five years. Required - Calculate the amount of impairment loss (if any) for the building and CGU under the assumption that Faris is: i) a publicly accountable entity. Allocate the impairment loss (if any) to the assets of the CGU.

Answer rating: 100% (QA)

a i The impairment loss for the building would be 700000 2800000 ... View the full answer