- 5 Marks
July 2023 – L2 – Q2a – Impairment of Assets (IAS 36)
Treatment of brand name in Bondito Ltd’s financials following impairment of its subsidiary Manyabe Ltd.
Question
Bondito Ltd acquired 100% of a subsidiary, Manyabe Ltd, on 1 January 2021. The carrying amount of the assets of Manyabe Ltd in the consolidated financial statements of the Bondito group at 31 December 2021, immediately before an impairment review, were as follows:
| Assets | GH¢ million |
|---|---|
| Goodwill | 1.4 |
| Brand name | 2 |
| Property, plant, and equipment | 6 |
| Current assets (at recoverable amount) | 2.4 |
| Total | 11.8 |
The recoverable amount of Manyabe Ltd was estimated at GH¢9.6 million at 31 December 2021, and the impairment of the investment in Manyabe Ltd was deemed to be GH¢2.2 million. Bondito Ltd applies IAS 16: Property, Plant, and Equipment, and IAS 36: Impairment of Assets in preparing its financial statements.
Required:
Assuming Manyabe Ltd represents a cash-generating unit, show the financial reporting treatment of the brand name at 31 December 2021 in the books of Bondito Ltd following the impairment review.
(Total: 5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Brand Name, Goodwill, IAS 36, Impairment, Property
- Level: Level 2
- Topic: IAS 36: Impairment of assets
- Series: JULY 2023