Cash-generating units, corporate assets, goodwill assignment

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Reference no: EM133083307

Question: Cash-generating units, corporate assets, goodwill

Camelot Ltd is in the business of manufacturing children's toys. Its operations are carried out through three operating divisions. namely the Merlin Division. the Hollow Division and the Hills Division. These divisions are separate cash-generating units. In accounting for any impairment losses. all central management assets are allocated to each of these divisions.

At 31 July 2016. the assets allocated to each division were as follows:

	Merlin CGU	Hollow CGU	Hills CGU
Buildings	$ 656	$ 600	$ 368
Accumulated depreciation	(336)	(304)	(272)
Land	160	240	120
Machinery	240	328	448
Accumulated depreciation	(48)	(256)	(248)
Inventory	96	64	80
Goodwill	32	40	24
Head Office assets	160	120	96

In relation to land values, the land relating to the Merlin and Hills Divisions have carrying amounts less than their fair values as stand-alone assets. The land held by the Hollow Division has a fair value less costs of disposal of $234.

Camelot Ltd determined the recoverable amount of each of the cash-generating units at 31 July 2016 as follows:

Merlin	$936
Hollow	720
Hills	640

Required
Prepare the journal entry(ies) for Camelot Ltd to record any impairment loss at 31 July 2016.

Reference no: EM133083307

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