Financial Statements 1.5E Practice paper one, is my answer correct?

I know the answer was £1,200, so I took the carrying amount of £19,600 away from the value in use of £1,800 and got the answer £1,200. Did I do that correctly? If not could someone please help me.

Comments

  • Adele69
    Adele69 AAT Student Posts: 320
    Yes.

    Recoverable Amount is the higher of Fair Value less Cost of Disposal', or 'Value in Use'
    Fair value less Cost of Disposal = 18,200
    Value in Use = 18,400

    Impairment exists if Carrying Amount is greater than Recoverable Amount, and to write it down would reduce 19,600 to 18,400
    Amount of Impairment = 1,200
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