An entity is reviewing one of its business segments for impairment. The carrying value of its net assets is € 20 million. Management has produced two computations for the value-in-use of the business segment. The first value (€ 18 million) excludes the benefit to be derived from a future reorganization, but the second value (€ 22 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: Explain whether the business segment is impaired.
An entity is reviewing one of its business segments for impairment. The carrying value of its net assets is € 20 million. Management has produced two computations for the value-in-use of the business segment. The first value (€ 18 million) excludes the benefit to be derived from a future reorganization, but the second value (€ 22 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: Explain whether the business segment is impaired.
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter16: Advanced Topics Concerning Complex Auditing Judgments
Section: Chapter Questions
Problem 57RSCQ
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An entity is reviewing one of its business segments for impairment. The carrying value of its net
assets is € 20 million. Management has produced two computations for the value-in-use of the
business segment. The first value (€ 18 million) excludes the benefit to be derived from a future
reorganization, but the second value (€ 22 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: Explain whether the business segment is impaired.
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