Problem
XYZ Ltd is an entity that specialises in the manufacture of sports shoes. The company reported the following assets in its statement of financial position at 30 June 2022, the entire company would be considered as a single cash generating unit:
Cash $300000
Inventory 300000
Factory Building 900000
Accumulated depreciation - factory (300000)
Patent 300 000
Accumulated amortisation-Patent (200000)
Land 300000
Goodwill 40000
$1640000
Because of the competition from overseas as customers pursue a strategy of buying online rather than visit XYZ Ltd's stores, XYZ Ltd assessed its impairment position at 30 June 2022. The indicators suggested that an impairment loss was probable. XYZ Ltd calculated a recoverable amount of its company of $1 500 000.
Task
Prepare the journal entry(ies) for any impairment loss occurring at 30 June 2022 (Show all your workings including the application of pro-rata method).