Unison Company has various cash generating units. One cash generating unit has the following carrying amount of assets at year end: Cash 600,000 Inventory 1,400,000 Land 2,500,000 Plant and equipment 9,000,000 Accumulated depreciation 1,500,000 Goodwill 1,000,000 The management determined the value in use of the cash generating unit at 8,500,000. The fair value less cost of disposal for the inventory was greater than the carrying amount. Required: Prepare journal entry to recognize the impairment loss.

Unison Company has various cash generating units. One cash generating unit has the following carrying amount of assets at year end: Cash 600,000 Inventory 1,400,000 Land 2,500,000 Plant and equipment 9,000,000 Accumulated depreciation 1,500,000 Goodwill 1,000,000 The management determined the value in use of the cash generating unit at 8,500,000. The fair value less cost of disposal for the inventory was greater than the carrying amount. Required: Prepare journal entry to recognize the impairment loss.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 14M

See similar textbooks

Similar questions

PROBLEM:Fluffy Company's division one is a cash generating unit. The company has determined the recoverable value of division one to be P440,000. Moreover, the company has also determined the following for its building:Value in use P240,000Fair value less cost of disposal 260,000The carrying amounts of division one's assets are as follows:Inventory P160,000Building 320,000Equipment 160,000Goodwill 10,000 How much impairment loss was allocated to the inventory?* 1 punto 70,000 50,000 52,500 75,000 How much impairment loss was allocated to the building? * 1 punto 100,000 105,000 80,000 60,000 How much is the impairment loss of division one?* 1 punto 200,000 210,000 150,000 130,000 Assume the…
The company provided the data of PP&E in a cash-generating unit (CGU) as follows: Cost Accumulated Depreciation Equipment A $ 15,000 $ 8,000 Equipment B 30,000 19,000 Equipment C 45,000 23,000 The unit’s fair value less costs to sell was $25,000. The unit’s future cash flows was $32,000, and its present value was $28,000. The company adopted IFRS. Prepare journal entries to record impairment. If the recoverable amount of Equipment C is $19,000, prepare journal entries to record impairment. If the recoverable amount of Equipment C is $24,000, prepare journal entries to record impairment.
2. The Cash generating unit of the Logitech Company is the electronic division. The said company calculated the value in use of the division and amounted to P8,000,000. The carrying amounts of the asset are presented as follows: Building Equipment Inventory a. 8,000,000 For additional information, the company also determined that the fair value less cost to sell the building is P4,500,000. b. 1,000,000 6,000,000 What should be the amount reported as impairment loss? c. 3,500,000 3,000,000 d. 11,500,000 2,500,000
Hearts Company has various cash generating units. One cash generating unit has the following carrying amount of assets at year-end: Cash 600,000 1,400,000 2,500,000 Inventory Land Plant and equipment Accumulated depreciation 9,000,000 1,500,000 Goodwill 1,000,000 The management determined the value in use of the cash generating unit at P8,500,000. The fair value less cost of disposal for the inventory was greater than the carrying amount. 1. Determine the amount of impairment loss.
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 is testing a store branch for impairment. The assets of thebranch include a building with a carrying amount of P4,000,000,equipment of P3,000,000, inventory of P2,000,000 and goodwill ofP500,000. The fair value less cost to dispose of the inventory is P2,500,000.The expected cashflows from the branch are: Year Amount1 P 2,000,0002 1,700,0003 1,500,0004 1,500,0005 1,300,000 The effective interest rate is 9%. The present value of the cashflowsbeyond year 5 is estimated to be at P400,000. 10. Value in use of the store branch11. Total Impairment Loss12. Carrying value of the building after impairment13. Carrying value of the inventory after impairment14. Carrying value of the goodwill after impairment
Fitzgerald Inc. uses IFRS and accounts for their property plant & equipment at amortized cost. Fitzgerald has a cash generating unit, Small Division, with a very unique business. Small Division has the following carrying amounts at June 30, 2021, its year end: $ 2,000 30,000 5,800 Land Building Equipment At June 30, 2021, the undiscounted future cash flows from operation and disposal of the division are estimated to be $38,000 (present value $33,50O). The land could now be sold for $3,000 (net of costs) but no separate valuations can be done on the building and equipment as there is little market for them for standalone use. Required: a. Perform impairment testing for the Small Division and calculate any impairment loss. b. Prepare the journal entry resulting from (a) c. Would your answer change if Fitzgerald reported under ASPE? How & Why?
Estimate the average total estimated useful life of depreciable property, plant, and equipment. Starbucks reports 580.6 million of depreciation and amortization in the statement of cash flows, of which 4.5 million relates to amortization of limited-life intangible assets. Does the estimate reconcile with stated accounting policy on useful lives for property, plant, and equipment? Explain.
A cash gent unit has these net assets: - goodwill: - $10 mProperty: - $15 mPlant Eper:- = $ 25 mThe company is ceviewing Cal for impairment. we Enor the flig information: - selling Price $ 30 mYou are res: - to calculate the recoverable $50 mselling costss $5 mValue in use amount of CaU galloc the impasment loss to the net assets of the company = =
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
The information that follows relates to equipment owned by Pearl Limited at December 31, 2020: Cost $9,810,000 Accumulated depreciation to date 1,090,000 Expected future net cash flows (undiscounted) 7,630,000 Expected future net cash flows (discounted, value in use) 6,921,500 Fair value 6,758,000 Costs to sell (costs of disposal) 54,500 At December 31, 2020, Pearl discontinues use of the equipment and intends to dispose of it in the coming year by selling it to a competitor. It is expected that the costs of disposal will total $54,500. Partially correct answer iconYour answer is partially correct. Assume that Pearl is a private company that follows ASPE. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 1. Prepare the journal entry at December 31, 2020, to record asset impairment, if any.…
12. RS Inc. sold a total of $23,000 of its products. As of the end of the year, a total of $9,600 of these sales had still not yet been collected. The original cost of products sold was $8,100. n Transactio Transactio Cash Asset + n Noncash Assets Cash Asset + Balance Sheet Noncash Assets = II Liabil- ities Balance Sheet = 13. On December 13, 2020, RS Inc. signed a contract with the organizer of the International Fair for Electronic Consumer Products for 100 units of RS's smaller spray cans, which are intended to be given away to visitors of the trade show. The selling price specified in the contract is $5 per unit. RS Inc. promised to deliver the units on March 10, 2021. IFECP has up to 30 days after delivery to pay for the spray cans. II Contrib. Capital Liabil- ities + Contrib. Capital Earned Rev- Capital enues + Income Statement Earned Rev- Capital enues Expen ses Expen = ses II Income Statement Net Incom e Net = Incom e II