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Chapter 11 Activity/Assignment: Ans. 10,000 Solution

The document provides two examples of calculating impairment loss and reversal of impairment loss for an intangible asset. In the first example, an impairment loss of 10,000 is calculated based on the asset's carrying amount of 60,000 being lower than its recoverable amount of 50,000 at the end of year 3. In the second example, a gain on reversal of 5,714 is calculated based on the asset's recoverable amount of 45,000 now being higher than its carrying amount which would have been 40,000 without prior impairment recognition.

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237 views

Chapter 11 Activity/Assignment: Ans. 10,000 Solution

The document provides two examples of calculating impairment loss and reversal of impairment loss for an intangible asset. In the first example, an impairment loss of 10,000 is calculated based on the asset's carrying amount of 60,000 being lower than its recoverable amount of 50,000 at the end of year 3. In the second example, a gain on reversal of 5,714 is calculated based on the asset's recoverable amount of 45,000 now being higher than its carrying amount which would have been 40,000 without prior impairment recognition.

Uploaded by

Randelle James Fiesta
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© © All Rights Reserved
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CHAPTER 11 ACTIVITY/ASSIGNMENT

1. At the beginning of Year 1, a government entity acquires an intangible asset for


₱100,000. The intangible asset has a useful life of 10 years. At the end of Year 3,
the entity determines an indication of impairment and makes the following estimates:
Fair value less costs to sell 60,000
Value in use 50,000
How much is the impairment loss?

Ans. 10,000
Solution:
(100,000 x 7/10) – 60,000 = 10,000

2. Use the information in #9 above. At the end of Year 6, Entity A determines an


indication that the previous impairment may no longer exist and makes the following
estimates:
Fair value less costs to sell 42,000
Value in use 45,000
How much is the gain on the reversal impairment loss?

Ans. 5,714
Solution:
Recoverable amount (VIU – higher): 45,000
CA had no I.L. been recognized in previous period:
(100,000 x 4/10) = 40,000
CA after the I.L: (60,000 x 4/7) 34,286
Gain on reversal of I.L. = (40,000 – 34,286) = 5,714

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