question archive On 1 January 2018, Lanjut Bhd acquired a plant which has an estimated useful life of five years for RM100 million
On 1 January 2018, Lanjut Bhd acquired a plant which has an estimated useful life of five years for RM100 million
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On 1 January 2018, Lanjut Bhd acquired a plant which has an estimated useful life of five years for RM100 million. The equipment showed indications of impairment on 31 December 2018. An estimated recoverable amount was carried out and indicated the selling price of equipment was RM54 million, the expected decommission and transportation cost was RM2 million and the estimated present value of the future economic benefits was RM56 million. Due to the sudden increase in demand on the product manufactured by this equipment, the recoverable amount based on value in use is expected to be RM80 million on 31 December 2020. Required: a) Calculate the impairment loss (if any) is as at 31 December 2018. (6 marks) (CLO]:PLOI:C4) b) The assets have shown reversal of impairment loss due to sudden increase in demand. Calculate the reversal (if any) of the impairment loss as at 31 December 2020. (5 marks) (CLOI:PLOI:C4) c) Show the extracts of statement of profit and loss and statement of financial position for each of the years ending 31 December 2018 to 2021. (10 marks) (CLOI:PLOI:C4) d) Describe the indications that an asset may be considered to have reversal of impairment loss within the scope of MERS 136. (4 marks) (CLOI:PLOI:C2)
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1) 100,000,000/5 = 20,000,000
At Dec. 31,2018
100,000,000-20,000,000= 80,000,000
Higher of Recoverable amount and PV of Cash inflows
54M- 2M= 52M
56M
Impairment Loss= 80M-56M=24M
2) 56M/4 = 14M x 2 = 28M
Cost at Dec 2020
56M-28M= 28M
if no impairment:
100M/5 x 3 = 60M
100M-60M= 40M
Reversal of impairment
80M-40M = 40M Max
24M recognize
16M Gain on revaluation (surplus)
3)
Dec 2018
Depreciation Expense : 20M
Impairment Loss: 24M
Dec 2019
Depreciation Expense: 14M
Dec 2020
Depreciation Expense: 14M
Gain on reversal of impairment loss: 24M
Revaluation Surplus: 16M
Dec 2021
Depreciation Expense: 80M/2 = 40M
4)
There is reversal if thee asset continues to rise in value or therr is a change of estimate on the inflows from such asset.
