ACCA Strategic Professional · Strategic Business Reporting (International) · Non-current assets
Zeta Co has a cash-generating unit (CGU) with a carrying amount of $800,000. Its fair value less costs of disposal is $700,000 and its value in use is $740,000. Under IAS 36, what impairment loss should Zeta recognise for the CGU?
The impairment loss is $60,000. Recoverable amount is the higher of fair value less costs of disposal and value in use, which is the $740,000 value in use. Subtracting this from the $800,000 carrying amount gives the loss recognised under IAS 36.
- A$60,000Correct
- B$100,000
- C$40,000
- D$0
Explanation
Recoverable amount is the higher of fair value less costs of disposal ($700,000) and value in use ($740,000), so $740,000. The impairment loss is $800,000 - $740,000 = $60,000. Using fair value less costs of disposal gives $100,000, which ignores that the higher figure must be used.
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