Skip to content

CA Intermediate · Advanced Accounting · AS 28 Impairment of Assets

Kaveri Industries Ltd. has a cash generating unit (CGU) with these carrying amounts: Building Rs 20,00,000, Plant Rs 30,00,000, Goodwill Rs 10,00,000. The recoverable amount of the CGU is Rs 45,00,000. Net selling price of the building individually is Rs 18,00,000. After allocating the impairment loss under AS 28, what is the carrying amount of the Plant?

Placeholder

  1. ARs 30,00,000
  2. BRs 24,00,000Correct
  3. CRs 25,00,000
  4. DRs 22,50,000

Explanation

Total carrying amount = 60,00,000; recoverable = 45,00,000; loss = 15,00,000. First reduce goodwill by 10,00,000 to nil. Remaining 5,00,000 is allocated pro rata to building and plant (20:30): building 2,00,000 and plant 3,00,000. Building becomes 18,00,000, which is not below its net selling price of 18,00,000, so no cap applies. Plant = 30,00,000 - 3,00,000 = 27,00,000. Recheck: the plant share is 5,00,000 x 30/50 = 3,00,000, so plant is 27,00,000.

Did you get it right without looking?

One question tells you little. A timed set on AS 28 Impairment of Assets shows your real accuracy, how long you take and where you lose marks.

Practise AS 28 Impairment of AssetsFree diagnostic mock

More AS 28 Impairment of Assets questions