Impairment loss

Alaa
Alaa Registered Posts: 30
in Management Accounting: Decisions and Control
Hi , I don’t know why did they calculate the impairment loss in this question as the carrying amount is less than the present value .

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  • Cheesypeesy
    Cheesypeesy Registered Posts: 101
    edited March 2019
    When impairing, you compare the carrying amount to the recoverable amount. This is the higher of fair value less costs of sale (£13,000,000 - £1,400,000 = £11,600,000) and value in use (£11,900,000). In this case it's the value in use.

    The carrying amount is £600,000 higher than the recoverable amount, so this is the amount to impair.
    Matthew Dearlove MAAT
    Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.
  • Alaa
    Alaa Registered Posts: 30
    Thank you I got it .

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