STUDY GUIDE
Topic 4
MFRS 136 IMPAIRMENT OF ASSETS
Topic Review Questions
Question 1
The following information relates to three assets:
A
RM000
B
RM000
C
RM000
Carrying value
Net realisable value
Value in use
100
110
120
150
125
130
120
100
90
Required:
1. What is the recoverable amount of each asset?
2. Calculate the impairment loss for each of the three assets.
Question 2
Explain the reasoning behind the definition of recoverable amount contained within MFRS136:
Question 3
An entity owns a property which was originally purchased for RM300,000. The property has been re-valued to RM500,000 with the revaluation of RM200,000 being recognised as other comprehensive income and recorded in the revaluation reserve. The property has a current carrying value of RM460,000 but the recoverable amount of the property has just been estimated at only RM200,000.
Required:
What is the amount of impairment and how should this be treated in the financial statements?
Tutorial Question 4
A company runs a unit that suffers a massive drop in income due to the failure of its technology on 1 January 20X8. The following carrying values were recorded in the books immediately prior to the impairment:
Goodwill
Technology
Brands
Land
Buildings
Other net assets
RM’million
20
5
10
50
30
40
The recoverable value of the unit is estimated at RM85 million. The technology is worthless, following its complete failure. The other net assets include inventory, receivables and payables. It is considered that the book value of other net assets is a reasonable representation of its net realisable value.
Required:
Show the impact of the impairment on 1 January.
Topic 5
Topic Review Questions
Question 1
Butler Berhad has a year end of 31 December. On 27 November 2012, Butler Berhad buys goods from a Swedish supplier for SwK 324,000. On 19 December 2012, Butler Berhad pays the Swedish supplier in full.
Exchange rates:
27 November 2012 RM1 = SwK 11.15
19 December 2012 RM1 = SwK 10.93
Required: Show the
MFRS 136 IMPAIRMENT OF ASSETS
Topic Review Questions
Question 1
The following information relates to three assets:
A
RM000
B
RM000
C
RM000
Carrying value
Net realisable value
Value in use
100
110
120
150
125
130
120
100
90
Required:
1. What is the recoverable amount of each asset?
2. Calculate the impairment loss for each of the three assets.
Question 2
Explain the reasoning behind the definition of recoverable amount contained within MFRS136:
Question 3
An entity owns a property which was originally purchased for RM300,000. The property has been re-valued to RM500,000 with the revaluation of RM200,000 being recognised as other comprehensive income and recorded in the revaluation reserve. The property has a current carrying value of RM460,000 but the recoverable amount of the property has just been estimated at only RM200,000.
Required:
What is the amount of impairment and how should this be treated in the financial statements?
Tutorial Question 4
A company runs a unit that suffers a massive drop in income due to the failure of its technology on 1 January 20X8. The following carrying values were recorded in the books immediately prior to the impairment:
Goodwill
Technology
Brands
Land
Buildings
Other net assets
RM’million
20
5
10
50
30
40
The recoverable value of the unit is estimated at RM85 million. The technology is worthless, following its complete failure. The other net assets include inventory, receivables and payables. It is considered that the book value of other net assets is a reasonable representation of its net realisable value.
Required:
Show the impact of the impairment on 1 January.
Topic 5
Topic Review Questions
Question 1
Butler Berhad has a year end of 31 December. On 27 November 2012, Butler Berhad buys goods from a Swedish supplier for SwK 324,000. On 19 December 2012, Butler Berhad pays the Swedish supplier in full.
Exchange rates:
27 November 2012 RM1 = SwK 11.15
19 December 2012 RM1 = SwK 10.93
Required: Show the