Section A

RetailCorp has a Cash Generating Unit (CGU) with the following carrying amounts: Goodwill $4m, Property $10m, Equipment $6m. An impairment review determines the recoverable amount of the CGU is $15m. The fair value less costs of disposal of the Property is $9m.

What is the carrying amount of the Equipment after allocating the impairment loss?

Total carrying amount = $4m + $10m + $6m = $20m. Recoverable amount = $15m. Impairment loss = $5m. Allocate first to Goodwill ($4m), reducing it to nil. The remaining $1m is allocated pro-rata to Property and Equipment based on their carrying amounts ($10m and $6m). Equipment allocation = $1m * (6/16) = $0.375m. New carrying amount of Equipment = $6m - $0.375m = $5.625m. Property allocation = $0.625m, reducing it to $9.375m (which is safely above its $9m floor).