Problem
Love Company has determined that one of its cash generating units (CGU) is impaired. The assets of the cash generating unit at carrying amount are:
|
Machinery
|
1,500,000
|
|
Building
|
3,000,000
|
|
Equipment
|
1,875,000
|
|
Furniture and fixture
|
1,125,000
|
|
Goodwill
|
900,000
|
The recoverable value of the cash generating units is P7,000,000. The fair value less cost of disposal of the equipment is P1,825,000
Task
a) How much is the impairment loss that should be allocated to Equipment?
b) How much is the carrying value of the building after allocation of the impairment loss?