Doc Company has determined that its electronics division is a cash generating unit. The entitycalculated the value in use of the division to be P8,000,000. The assets of the cash generating unit atcarrying amount are as follows:BuildingEquipmentInventory5,000,0003,000,0002,000,000Doc Company has also determined that the fair value less cost to sell of the building is P4,500,000.What is the impairment loss to be allocated to the equipment?

An impaired loss is the loss which results to the asset of the company as a result that the market…

Answered: What is the impairment loss to be…

Business

Accounting

What is the impairment loss to be allocated to the equipment?

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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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
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
Ermon Company determined that its electronics division is a cash generating unit. The entity calculated the value in use of the division at P8,000,000. The carrying amounts of the assets are: Building P5,000,000; Equipment - P3,000,000; and Inventory - P2,000,000. The entity also determined that the fair value less cost of disposal of the building is P4,500,000. What is the impairment loss to be allocated to the equipment? A. 1,000,000 B. 900,000 C. 600,000 D. 400,000
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
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.)
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?
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.
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.
7. A company operates a mine in a country where legislation requires that the owner must restore the site on completion of its mining operations. The cost of restoration includes the replacement of the overburden, which must be removed before mining operations commence. A provision for the costs to replace the overburden was recognized as soon as the overburden was removed. The amount provided was recognized as part of the cost of the mine and is being depreciated over the mine's useful life. The carrying amount of the provision for restoration costs is P500,000, which is equal to the present value of the restoration costs.
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.
SeaLine Corporation is involved in the distribution of processed marine products. The fair values of assets and liabilities held by three reporting units and other information related to the reporting units owned by SeaLine are as follows: Cash Accounts Receivables Inventory Land Buildings Equipment Accounts Payable Fair Value of Reporting Unit Carrying Value of Investment Goodwill Included in Carrying Value Unit Y $ 45,000 18,000 60,000 45,000 80,000 45,000 45,000 Unit X $ 15,000 15,000 35,000 30,000 120,000 140,000 25,000 360,000 230,000 375,000 240,000 50,000 25,000 Unit Z $ 35,000 10,000 35,000 20,000 50,000 50,000 25,000 220,000 240,000 40,000 Required: Determine the amount of goodwill that SeaLine should report in its current financial statements.
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…