Business, 19.10.2020 02:01 Jessifraser589

IAS 36: IMPAIRMENT OF ASSETS Question Nne.
Zeltec PLC (Zeltec) has 800 hectares of agricultural land amongst its fixed assets at cost of 4,400,000 as at 30 June 2005. The
required rate of return is 7%.
Due to the state of the agricultural sector the directors with to check whether the value of the land has been impaired. The land
has been rented out at an annual rent of 400 per hectare with five yearly rental reviews.
The rent recently has been renegotiated at an annual rent of 350 per hectare for the five years commencing 1 July 2005. Values
recently estimate that the land would fetch 4,000 per hectare on a sale at 1 July 2005.
Required:
Advise the directors if an impairment has occurred and, if so, provide the account entry required to reflect the impairment in the
accounts for the year to 30 June 2005.
Hint: Land is assumed to have an indefinite life. The rental income should also be indefinite.

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IAS 36: IMPAIRMENT OF ASSETS Question Nne.
Zeltec PLC (Zeltec) has 800 hectares of agricultura...

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