A company has the following assets in a CGU: Land: $650,000 Building: $1,118,000 Equipment: $832,000 Assume that due to a change in the competitive environment, the fair value less costs of disposal of the CGU is now estimated to be $2,340,000. The present value of future cash flows is estimated to be $2,300,000. There is no impairment at the individual asset level. Required: Prepare the journal entry to record the impairment under IFRS. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction General Journal 1 1 Impairment loss Land Building Equipment Debit Credit 260,000 50,000 120,400x 89,600x

A company has the following assets in a CGU: Land: $650,000 Building: $1,118,000 Equipment: $832,000 Assume that due to a change in the competitive environment, the fair value less costs of disposal of the CGU is now estimated to be $2,340,000. The present value of future cash flows is estimated to be $2,300,000. There is no impairment at the individual asset level. Required: Prepare the journal entry to record the impairment under IFRS. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction General Journal 1 1 Impairment loss Land Building Equipment Debit Credit 260,000 50,000 120,400x 89,600x

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company has the following assets in a CGU: Land: $650,000 Building: $1,118,000 Equipment: $832,000 Assume that due to a change in the competitive environment, the fair value less costs of disposal of the CGU is now estimated to be $ 2,340,000. The present value of future cash flows is estimated to be $2,300,000. Assume that the fair value of the land has been determined to be $600,000. Required: Prepare the journal entry to record the impairment under IFRS. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
An asset group is being evaluated for an impairment loss. The following financial information is available for the asset group: Carrying Value=100,000,000 Sum of the undiscounted cash flows= 95,000,000 Fair value= 80,000,000 Carrying Value= $100,000,000 What is the value of the impairment loss?
A non-current asset has a carrying amount of GHS 20,000. It could be sold for GHS 18,500 with selling costs of GHS 500. Its value in use is GHS 22,000 and its replacement cost GHS 50,000. According to IAS 36 Impairment of Assets, what is the recoverable amount of this asset? A GHS 18,000 B GHS 20,000 C GHS 22,000 D GHS 50,000
A non-current asset has a carrying amount of GHS 20,000. It could be sold for GHS 18,500 with selling costs of GHS 500. Its value in use is GHS 22,000 and its replacement cost GHS 50,000. According to IAS 36 Impairment of Assets, what is the recoverable amount of this asset?
The net assets of Fyngle, a cash generating unit (CGU) are: $ Property, plant and equipment 200,000 Allocated goodwill 50,000 Product patent 20,000 Net current assets (at net realisable value) 30,000 300,000 As a result of adverse publicity, Fyngle has a recoverable amount of only $200,000. What would be the value of Fyngle's property, plant and equipment after the allocation of the impairment loss?
(Fair Value Estimate) Killroy Company owns a trade name that was purchased in an acquisition of McClellan Company. The trade name has a book value of $3,500,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Killroy must estimate the fair value of the trade name. (You will learn more about intangible asset impairments in Chapter 12.) It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Killroy’s estimate of annual cash flows over the next 8 years. The trade name is assumed to have no salvage value after the 8 years. (Assume the cash flows occur atthe end of each year.) Cash Flow Estimate Probability Assessment $380,000 20% 630,000 50% 750,000 30% Instructions(a) What is the estimated fair value of the trade name? Killroy determines that the appropriate discount rate for this estimation is 8%.(b) Is the estimate developed for…
INSTIGATE PROVOKE Co. determined that one of its cash-generating units is impaired. Information on the assets of the CGU is shown below: Assets Carrying amount Inventory 800,000 Investment property (at cost model) 1,600,000 Building 2,400,000 Goodwill 1,200,000 6,000,000 It was estimated that the value in use of the CGU is ₱3,600,000 and its fair value less costs of disposal is ₱2,400,000. How much is the impairment loss? a. 4,200,000 b. 3,200,000 c. 2,400,000 d. 2,000,000 2.How much is the carrying amount of the building after the impairment testing? a. 1,680,000 b. 1,120,000 c. 1,860,000 d. 2,040,000
8. ABC has determined that one of its cash generating units (CGU) is impaired. The assets of the CGU at their book value are: Land – 4,000,000; Factory – 1,200,000; Machinery and Equipment – 1,800,000. The value in use of the cash generating unit is P5,500,000. The factory’s fair value is P1,000,000. The impairment loss allocated to Machinery and Equipment is? (do not round off the percentage, round off your final answer to the nearest peso)
ABC Ltd has determined that one of its cash-generating units (CGUs) has sustained an impairment loss of $50 000. The carrying amount of the assets within the CGU are as follows. Asset 1 Asset 2 Asset 3 Total $ 150 000 200 000 50 000 400 000 The estimated fair value less costs of disposal of Asset 2 is $190 000, which is greater than its value in use. Required In accordance with IAS 16 Property, Plant and Equipment and IAS 36 Impairment of Assets, calculate the amount of impairment loss allocated to the three assets, and the carrying amounts of the assets after the allocation. Prepare relevant journal entries. Show workings and calculations.
ABC Co. has a division that is considered to be a cash-generating unit for purposes of IAS 36, impairment of assets. The recoverable amount of this cash-generating unit is $130 000 at 31 December 2014. The carrying amount of the cash-generating unit is $181 000 at 31 December 2014, constituted by the following individual carrying amounts as at this date: Goodwill (purchased goodwill): 20 000 Equipment (measured under the cost model): 60 000 |Investment property (measured under the cost 81 000 model: Inventory 20 000 The recoverable amounts at 31 December 2014 for the goodwill and investment property could not be estimated on an individual basis, but the recoverable amount for equipment was estimated to be $40 000. In accordance with IAS 2 the net realizable value of the inventory was $15 000. Required: Calculate whether the cash-generating unit is impaired and compute the impairment loss if there's any.
ABC has determined that one of its cash generating units (CGU) is impaired. The assets of the CGU at their book value are: Land – 4,000,000; Factory – 1,200,000; Machinery and Equipment – 1,800,000. The value in use of the cash generating unit is P5,500,000. The impairment loss allocated to Machinery and Equipment is? (do not round off the percentage, round off your final answer to the nearest peso)
How much should be recorded as the purchase price of theindividual PPE items: 5. The old equipment has an original cost of P1,500,000,accumulated depreciation of P600,000, and fair value ofP1,000,000. The new equipment obtained throughexchange has a fair value of P1,200,000. The balance was settled with cash. The exchange will not affect the future cashflows of the entity.