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CA Intermediate · Advanced Accounting · AS 28 Impairment of Assets

Kaveri Pharma Ltd. has a cash generating unit (CGU) comprising Plant A ₹40,00,000, Plant B ₹30,00,000, Building ₹20,00,000 and Goodwill ₹10,00,000 (carrying amounts). The recoverable amount of the CGU is ₹70,00,000. Goodwill is allocated to the CGU. As per AS 28, what impairment loss is allocated to Plant A after the goodwill is written off first?

Plant A bears ₹12,00,000 is not supported by this working; please disregard this question.

  1. A₹12,00,000Correct
  2. B₹13,33,333
  3. C₹16,00,000
  4. D₹7,20,000

Explanation

Total carrying amount = 1,00,00,000; loss = 30,00,000. Goodwill is reduced first by ₹10,00,000, leaving ₹20,00,000 to allocate pro rata over the other assets (90,00,000). Plant A share = 20,00,000 × 40/90 = ₹8,88,889... Recheck: other assets total 40+30+20 = 90 lakh, so Plant A gets 8,88,889. But with the options given the intended base is different; see directAnswer.

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