(ii) Oracle Plc owned 100% of the equity share capital of Red Plc, a wholly owned subsidiary. The assets at the reporting date of Red Plc were as follows: Goodwill 2,400,000 Buildings 6,000,000 Plant and equipment 5,200,000 Other intangibles (patent) 2,000,000 Receivables and cash 1,400,000 Total 17,000,000 On the reporting date a fire within one of Red's buildings led to an impairment review being carried out. The recoverable amount of the business was determined to be £9.8 million. The fire destroyed some plant and equipment with a carrying value of £1.2 million and there was no option but to scrap it. The other intangibles consist of a licence to operate Red's plant and equipment. Following the scrapping of some of the plant and equipment a competitor offered to purchase the patent for £1.5 million. The receivables and cash are both stated at their realisable value and do not require impairment. Required: Show how the impairment loss in Red is allocated amongst the assets. Show all your workings

(ii) Oracle Plc owned 100% of the equity share capital of Red Plc, a wholly owned subsidiary. The assets at the reporting date of Red Plc were as follows: Goodwill 2,400,000 Buildings 6,000,000 Plant and equipment 5,200,000 Other intangibles (patent) 2,000,000 Receivables and cash 1,400,000 Total 17,000,000 On the reporting date a fire within one of Red's buildings led to an impairment review being carried out. The recoverable amount of the business was determined to be £9.8 million. The fire destroyed some plant and equipment with a carrying value of £1.2 million and there was no option but to scrap it. The other intangibles consist of a licence to operate Red's plant and equipment. Following the scrapping of some of the plant and equipment a competitor offered to purchase the patent for £1.5 million. The receivables and cash are both stated at their realisable value and do not require impairment. Required: Show how the impairment loss in Red is allocated amongst the assets. Show all your workings

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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(ii) Oracle Plc owned100% of the equity share capital of Red Plc, a wholly owned subsidiary. The assets at the reporting date of Red Plc were as follows: £000 Goodwill 2,400 Buildings 6,000 Plant and equipment 5,200 Other intangibles (patent) 2,000 Receivables and cash 1,400 Total 17,000 On the reporting date a fire within one of Red’s buildings led to an impairment review being carried out. The recoverable amount of the business was determined to be £9.8 million. The fire destroyed some plant and equipment with a carrying value of £1.2 million and there was no option but to scrap it. The other intangibles consist of a licence to operate Red’s plant and equipment. Following the scrapping of some of the plant and equipment a competitor offered to purchase the patent for £1.5 million. The receivables and cash are both stated at their realisable value and do not require impairment. Required: Show how the impairment loss in Red is allocated amongst the assets. Show all your workings.…
During the current year, Brewer Company acquired all of the outstanding common stock of Miller Inc. paying $11,900,000 cash. The book values and fair values of Miller's assets and liabilities acquired are listed below: Book Value Fair Value Accounts receivable $ 1,750,000 $ 1,575,000 Inventories 2,600,000 3,900,000 Property, plant, and equipment 8,900,000 11,525,000 Accounts payable 2,900,000 2,900,000 Bonds payable 4,400,000 4,025,000 Prepare the journal entry to record the acquisition by Brewer Company.
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On 1 January 2012, Bad Ltd acquired all the assets and liabilities of Wolf Ltd. Wolf Ltd has several operating divisions, including one whose major industry is the manufacture of toy trains, particularly those of historical significance. The toy trains division is regarded as a CGU. In paying $2 million for the net assets of Wolf Ltd, Bad Ltd calculated that it had acquired goodwill of $240 000. The goodwill was allocated to each of the divisions, and the assets and liabilities acquired measured at fair value at acquisition date. On 31 December 2014, the carrying amounts of the assets of the toy train division were: Factory $250 000 Inventory $150 000 Brand — ‘Froggy’ $50 000 Goodwill $50 000 Total 500 000 There is a declining interest in toy trains because of the aggressive marketing of computer-based toys, so the management of Bad Ltd measured the value in use of the toy train division on 31 December 2014, determining it to be $423 000.…
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