Exercise 5 Palpable Company has determined that the furniture division is a cash generating unit

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Exercise 5

Palpable Company has determined that the furniture division is a cash generating unit. The entity calculated the value in use of the division to be P11,000,000.

The entity has also determined that the fair value less cost of disposal of the building is P6,500,000. The carrying amounts of the assets are:

Building 8,000,000

Equipment 4,000,000

Inventory 4,000,000

Required) A

1)Determine the impairment loss.

2)Allocate the impairment loss to the assets of the cash generating unit.

3)Prepare journal entry to record the impairment loss.