At reporting date Pop Fizz Limited estimated an impairment loss of $50 000 against its single cash-generating unit. The company had the following assets: headquarters building $200 000; plant $120 000; equipment $40 000. The net carrying amount of the headquarters building after allocation of the impairment loss is:

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First, identify the total carrying amount of the cash-generating unit (CGU): 200,000 (building) + 120,000 (plant) + 40,000 (equipment) = 360,000.
Next, determine the impairment loss to allocate across the CGU: 50,000.
Impairment is allocated to each asset in proportion to its carrying amount within the CGU. The proportions are:
- Building: 200,000 / 360,000 = 0.5556
- Plant: 120,000 / 360,000 = 0.3333
- Equipment: 40,000 / 360,000 = 0.1111
Now compute impairment allocation to each asset:
- Building allocation: 0.5556 × 50,000 ≈ 27,778
- Plant allocation: 0.3333 × 50,000 ≈ 16,667
- Equipment allocation: 0.1111 × 50,000 ≈ 5,556
Subtract these allocations from the respective assets to get new carrying amounts:
- Building: 200,000 − 27,778 = 172,222
- Plant: 120,000 − 16,667 = 103,333
- Equipment: 40,000 − 5,556 = 34,444
Thus, the net carrying amount of the headquarters building after impairment is 172,222.
Note: The question asks specifically for the headquarters building’s net carrying amount, not the total CGU or the other assets. If you were asked for the CGU total after impairment, you would sum 172,222 + 103,333 + 34,444 = 310,000, matching the given total after impairment.

22420 Accounting Standards and Regulations - Spring 2025 Checkpoint week 3

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