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1. A division of Xero has the following balances in its financial statements:










Other net assets




Following a period of losses, the recoverable amount of the division is deemed to be $5 million A recent valuation of the building showed that the building has a market value of $3.2 million. The other net assets are at their recoverable amount. The entity uses the cost model for valuing building and plant.

To the nearest thousand, what is the balance on plant following the impairment review?


2. Which of the following best describes the recoverable amount of an asset?
3. A CGU subsidiary has the following net assets:


2 Engines


Tracks and Stations






Net Current Assets


In a recent collision with a bus, one of the engines has exploded, is not capable of economic repair and must be scrapped for just one sixth of its carrying value. Because the engine was fundamental to the continuing viability of the business the directors have decided to cut back severely on the company’s activities and have now received an offer of $65,000 for the brand.

As it stands the recoverable amount of the entire subsidiary has been estimated at $350,000,

What will be the values of the remaining engine and the goodwill after the impairment loss has been accounted for?

4. Which of the following indicators would NOT be recognised as an suggestion that assets are impaired?
5. IAS 36 Impairment of Assets suggests how indications of impairment might be recognised.

Which TWO of the following would be EXTERNAL INDICATORS that one or more of an entity's assets may be impaired?

1. Evidence of obsolescence of one or more assets

2. A decline in the economic performance of one or more assets

3. An unusually significant fall in the market value of one or more assets

4. An increase in market interest rates used to calculate value in use of the assets

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