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    Case Study Question

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    athirah jamaludin
    The document provides information on 4 case studies related to assessing impairment of plant and equipment for Novella Sdn Bhd: 1) The mast and generators are not impaired, but the computer equipment and credit card machine are impaired based on their carrying and recoverable amounts. Any impairment loss would be recognized. 2) The plant and equipment scrapped in 2019 had a recoverable amount of RM50,000 and would be impaired by RM4.95 million as of November 30, 2018. 3) The business segment's value in use including future reorganization benefits exceeds its carrying amount so no impairment would be recognized in 2019. 4) For Ajinomoto, the document does not specify if

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    Case Study Question

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    athirah jamaludin
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    The document provides information on 4 case studies related to assessing impairment of plant and equipment for Novella Sdn Bhd: 1) The mast and generators are not impaired, but the computer equipment and credit card machine are impaired based on their carrying and recoverable amounts. Any impairment loss would be recognized. 2) The plant and equipment scrapped in 2019 had a recoverable amount of RM50,000 and would be impaired by RM4.95 million as of November 30, 2018. 3) The business segment's value in use including future reorganization benefits exceeds its carrying amount so no impairment would be recognized in 2019. 4) For Ajinomoto, the document does not specify if

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    The document provides information on 4 case studies related to assessing impairment of plant and equipment for Novella Sdn Bhd: 1) The mast and generators are not impaired, but the computer equipment and credit card machine are impaired based on their carrying and recoverable amounts. Any impairment loss would be recognized. 2) The plant and equipment scrapped in 2019 had a recoverable amount of RM50,000 and would be impaired by RM4.95 million as of November 30, 2018. 3) The business segment's value in use including future reorganization benefits exceeds its carrying amount so no impairment would be recognized in 2019. 4) For Ajinomoto, the document does not specify if

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    113 views3 pages

    Case Study Question

    Uploaded by

    athirah jamaludin
    The document provides information on 4 case studies related to assessing impairment of plant and equipment for Novella Sdn Bhd: 1) The mast and generators are not impaired, but the computer equipment and credit card machine are impaired based on their carrying and recoverable amounts. Any impairment loss would be recognized. 2) The plant and equipment scrapped in 2019 had a recoverable amount of RM50,000 and would be impaired by RM4.95 million as of November 30, 2018. 3) The business segment's value in use including future reorganization benefits exceeds its carrying amount so no impairment would be recognized in 2019. 4) For Ajinomoto, the document does not specify if

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    of 3

    Alternative Assessment

    Financial Accounting & Reporting III


    Semester 3, 2019/2020

    Case Study 10%

    Case Study 1
    The following information relates to individual plant and equipment used by Novella Sdn Bhd for
    its telecommunication operations as at 31st December 2018.

    Fair value less cost to


    Carrying Amount Value in use
    sell
    (RM’000) (RM’000)
    (‘RM000)
    Mast 297,500 302,500 285,000
    Generators 592,500 517,500 512,500
    Computer Equipment 287,500 292,500 307,500
    Credit Card Machine 207,500 187,500 197,500
    Motor Vehicle 77,500 65,000 -

    Additional information:

    i) The mast and the generator are carried at the revalued amount and the cumulative
    revaluation surplus in other comprehensive income for the equipment are RM30
    million and RM15 million respectively.

    ii) The motor vehicles are buses used for transporting employees in the morning and
    evening, and it is not possible to determine the value in use of the buses separately
    because the buses do not generate cash inflow from continuing use that are
    independent of the cash flows from other assets.

    Required:
    Indicate whether each of the Plant and Equipment is impaired or not and also, explain how the
    impairment loss should be treated in the books of Novella Sdn Bhd as at 31 December 2018.

    Case Study 2

    Novella Sdn Bhd is preparing its financial statements for the year ending 30 November 2018. Certain
    items of plant and equipment were scrapped on 1st January 2019. On 30 November 2018, these assets
    were being used in production by the entity and had a carrying value of RM5 million. The value-in-use
    of the asset on 30 November 2018, was deemed to be RM6 million, and its fair value less costs to sell
    was thought to be RM50,000 (the scrap value).
    Required:
    What is the recoverable amount of the plant and equipment at 30 November 2018?

    Case Study 3

    In 2019, Novella Sdn Bhd is reviewing one of its business segments for impairment. The carrying value
    of its net assets is RM20 million. Management has produced two computations for the value-in-use of
    the business segment. The first value RM18 million excludes the benefit to be derived from a future
    reorganization, but the second value RM22 million includes the benefits to be derived from the future
    reorganization. There is not an active market for the sale of the business segments.

    Required:
    Should the Novella Sdn Bhd recognise impairment on the business segment in 2019?

    Constructive Case Study

    Ajinomoto (Malaysia) Berhad is the biggest distributor of monosodium glutamate (MSG) in Malaysia.
    The products range from consumer products to industrial products. The following are the extractions
    of the statement of financial position for Ajinomoto and notes to the financial statement for the year
    2018 and 2017.
    Ajinomoto suffered a reduction in the amount in property, plant, and equipment in 2018. Through the
    above extractions, the company does not specify whether the company suffered impairment or not.
    However, the company did specify the number of additions, transfer, disposal, and written off.

    You are required to conduct impairment testings (if necessary) assuming all the items under property,
    plant, and equipment are independent cash-generating units from others. For capital work in progress
    assets, these are assets that have not yet used or still in production. Hence there are no factors that
    can drop the value of the asset. This type of asset is exempted from your calculation.

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