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QUESTIONS FROM PAST EXAM PAPERS

Q10 (Nov. 18 – 10 Marks)
XYZ Limited has three cash-generating units - X, Y and Z, the carrying amounts of which as on 31st March,

2018 are as follows:
Cash Generating Carrying Amount (Rs. Remaining useful life
Units in lakh) in years
X 800 20
Y 1000 10
Z 1200 20

XYZ Limited also has corporate assets having a remaining useful life of 20 years as given below:
Corporate Carrying amount (Rs. Remarks
Assets in lakh)
AU 800 The carrying amount of AU can be allocated on a reasonable
basis to the individual cash generating units.
BU 400 The carrying amount of BU cannot be allocated on a reasonable
basis to the individual cash-generating units.
Recoverable amounts as on 31st March, 2018 are as follows:

Cash-generating units Recoverable amount (Rs. in lakh)
X 1000
Y 1200
Z 1400
XYZ Limited 3900
Calculate the impairment loss if any of XYZ Ltd. Ignore decimals.
SOLUTION

(i) Allocation of corporate assets to CGU
The carrying amount of AU is allocated to the carrying amount of each individual cash- generating unit. A
weighted allocation basis is used because the estimated remaining useful life of Y’s cash-generating
unit is 10 years, whereas the estimated remaining useful lives of X and Z’s cash-generating units are

20 years.
(Rs in lakh)
Particulars X Y Z Total
(a) Carrying amount 800 1000 1,200 3,000
(b) Useful life 20 years 10 years 20 years
(c) Weight based on useful life 2 1 2

(d) Carrying amount (after assigning weight) (a x c) 1,600 1,000 2,400 5,000
(e) Pro-rata allocation of AU 32% 20% 48% 100%
(1,600/5,000) (1,000/5,000) (2,400/5,000)

(f) Allocation of carrying amount of AU (32: 20: 48) 256 160 384 800
(g) Carrying amount (after allocation of AU) (a + f) 1,056 1,160 1,584 3,800

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