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URGENT QUESTION Loco Bhd has two divisions, T and R, each of which is a separate cash-generating unit (CGU)

Accounting

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1. URGENT QUESTION
2. Loco Bhd has two divisions, T and R, each of which is a separate cash-generating unit (CGU). As at 31 December 2017 the net assets of each division, were as follows:

Additional information as at 31 December 2017:

• T’s land had a fair value less costs to sell of RM302,000.
• R’s land had a fair value less costs to sell of RM110,000.
• Receivables were considered to be collectable.
• Inventories were measured at lower of cost and net realizable value.

Loco Bhd’s management conducted an impairment testing at 31 December 2017 and determined the recoverable amount of each CGU to be RM811,000 for T and RM520,000 for R.

Required:

For the financial year ended 31 December 2017:

1. State the main accounting standard applicable to the above situation. (2 mark)
2. Analyse whether the CGU’s are impaired. Explain your answer. (2 marks)
3. Calculate impairment loss for each CGU (if any). (4 marks)
4. Allocate the impairment loss.