Cash-generating unit (adopted from Wiley publication) Sydney Ltd reported the following assets in its statement of financial position at 30 June 2020: Assets Carrying Amount Plant $570 000 Land 300 000 Patent 240 000 Office equipment 280 000 Inventory 400 000 $1 790 000 The recoverable amount of the entity was calculated to be $1 660 000. The fair value less costs of disposal of the land was $280 913. Required: Prepare the journal entry for any impairment loss at 30 June 2020. Answer: Carrying amount of assets = Recoverable amount = Impairment loss = Assuming the inventory is carried at the lower of cost and net realisable value, the allocation of the impairment loss will not involve both cash and inventory

Cash-generating unit (adopted from Wiley publication) Sydney Ltd reported the following assets in its statement of financial position at 30 June 2020: Assets Carrying Amount Plant $570 000 Land 300 000 Patent 240 000 Office equipment 280 000 Inventory 400 000 $1 790 000 The recoverable amount of the entity was calculated to be $1 660 000. The fair value less costs of disposal of the land was $280 913. Required: Prepare the journal entry for any impairment loss at 30 June 2020. Answer: Carrying amount of assets = Recoverable amount = Impairment loss = Assuming the inventory is carried at the lower of cost and net realisable value, the allocation of the impairment loss will not involve both cash and inventory

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 1.3AIC: Estimate the average total estimated useful life of depreciable property, plant, and equipment....

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P10.5A Journalise a series of equipment transactions related to purchase, sale, retirement, and depreciation At December 31, 2021. Grand Regency Limited reported the following as Non-current tangible assets: 4,000,000 16,400,000 June 11 July 1 Dec. 31 Land Buildings Less: Accumulated depreciation - buildings Equipment Less: Accumulated depreciation - equipment Total plant assets During 2022, the following selected cash transactions occurred. April 1 Purchased land for R2,130,000. May 1 (b) (c) (d) 28,500,000 12,100,000 48,000,000 5,000,000 Required: (a) 43,000,000 £63,400,000 Sold equipment that cost R750,000 when purchased on January 1, 2018. The equipment was sold for R450,000. Sold land purchased on June 1, 2012 for R1,500,000. The land cost R400,000. Purchased equipment for R2,500,000. Retired equipment that cost R500,000 when purchased on December 31, 2012. No salvage value was received. Prepare general journal entries the above transactions. The company uses straight-line…
The draft balance sheet of Tere Corporation as of December 31, 2019 reported the net property, plant and equipment at P110,000,000. Details of the amount follow: Land at cost P10,000,000Building at cost P50,000,000Less accumulateddepreciation at 12/31/18 (20,000,000) 30,000,000Plant at cost 94,500,000Less accumulateddepreciation at 12/31/18 (24,500,000) 70,000,000 110,000,000The following matters are relevant:• On 30 June 2019, Tere terminated the production of one of its product lines. From this date, the plant used to manufacture the product has been actively marketed at an advertised price of P4.2 million which is considered realistic. Assume that this plant qualified as held for sale in accordance withPFRS 5. It is…
Monroe Company is engaged in a number of research and development projects. Its accounting policy with regards to research and development is to capitalize expenditure as far as allowed by PAS 38 Intangible Assets. At June 30, 2024, the following balances existed in the company's accounting records: Project A : Development completed June 30, 2022. Total expenditure P200.000. Being amortized over five years on the straight-line basis in accordance with the company's standard policy. Balance at June 30, 2024: P120,000. Project B: A development project commenced July 1, 2019. Total expenditures in the years ended June 30, 2023 and June 30, 2024 totaled P175,000. During the year ended June 30, 2025, it became clear that a competitor had launched a superior product and the project was abandoned. Further development expenditure in the year ended June 30, 2025 amounted to P55,000. Project C: Development commenced October 1, 2020. Expenditures per year: Year ended June 30, 2025,…
At 30 June 2022, Boxes Ltd reported the following assets. Land $100 000 Plant $500 000 Accumulated Depreciation (100 000) Goodwill 16 000 Inventories 80 000 Cash 4 000 All assets are measured using the cost model. At 30 June 2022, the recoverable amount of the entity, considered to be a single CGU, was $544 000. For the period ending 30 June 2023, the depreciation charge on plant was $36 800. If the plant had not been impaired the charge would have been $50 000.. At 30 June 2023, the recoverable amount of the entity was calculated to be $26 000 greater than the carrying amount of the assets of the entity. As a result, Boxes Ltd recognised a reversal of the previous year’s impairment loss. The journal entry relating to impairment reversal is a. Reversal of impairment is not allowed b. Accum. impairment losses – Land Dr 5…
Company A applies IFRS. The following information pertains to Company A's intangible assets: On December 31, Year 3, Company A determines the following data regarding one of its cash-generating units (CGUs): Total CGU Liabilities Other Assets Goodwill Carrying amount $90,000 ($160,000) $200,000 $50,000 Fair value minus cost to sell $80,000 Value in use $65,000 On January 1, Year 2, Company A purchased a restaurant franchise for $360,000. The franchise has an active market, and the company applies the revaluation model as its accounting policy regarding franchises and amortizes them using the straight-line method. The estimated useful life of the franchise is 20 years with no residual value. The company revalues the franchise at the end of each year. The fair values of the franchise at the end of Years 2 and 3 are $350,000 and $330,000 respectively. During Year 1, the company incurred the following costs in relation to an internally developed patent: research…
Company A applies IFRS. The following information pertains to Company A's intangible assets: On December 31, Year 3, Company A determines the following data regarding one of its cash-generating units (CGUs): Total CGU Liabilities Other Assets Goodwill Carrying amount $90,000 ($160,000) $200,000 $50,000 Fair value minus cost to sell $80,000 Value in use $65,000 On January 1, Year 2, Company A purchased a restaurant franchise for $360,000. The franchise has an active market, and the company applies the revaluation model as its accounting policy regarding franchises and amortizes them using the straight-line method. The estimated useful life of the franchise is 20 years with no residual value. The company revalues the franchise at the end of each year. The fair values of the franchise at the end of Years 2 and 3 are $350,000 and $330,000 respectively. During Year 1, the company incurred the following costs in relation to an internally developed patent: research…
t December 31, 2020, Grand Company reported the following as plant assets.Land $ 4,000,000Buildings $28,500,000Less: Accumulated depreciation—buildings 12,100,000 16,400,000Equipment 48,000,000Less: Accumulated depreciation—equipment 5,000,000 43,000,000 Total plant assets $63,400,000During 2021, the following selected cash transactions occurred.April 1 Purchased land for $2,130,000.May 1 Sold equipment that cost $750,000 when purchased on January 1, 2017. The equipment was sold for $450,000.June 1 Sold land purchased on June 1, 2011 for $1,500,000. The land cost $400,000.July 1 Purchased equipment for $2,500,000.Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2011. The company received no proceeds related to salvage.Instructions c. Prepare the plant assets section of Grand’s balance sheet at December 31, 2021.
The fair value of the net identifiable assets of Pax Limited are determined as follows:($000)Patent rights 200Machinery 1,000Buildings 1,500Land 2,3005,000Less: Bank loan 600Net assets 4,400At the end of the reporting period of 30 June 2019, the management of Snowy Ltd determines thatthe recoverable amount of the cash-generating unit, which is considered to be Pax Ltd, totals$4,500,000. The carrying amount of the net identifiable assets of Pax Ltd, excluding goodwill, isunchanged and remains at $4,400,000.Required:a) Prepare the journal entry to account for any impairment of goodwill. (6 marks)b) Assume instead that at the end of the reporting period the management of Snowy Ltd determinesthat the recoverable amount of the cash-generating unit, which is considered to be Pax Ltd, totals$4,200,000. Determine the impairment of goodwill amount.
1. E. Adentwi Enterprises Ltd bought a machine for GH₵ 150,000 on 1st January 2019. It depreciates the machine on cost over four years assuming a nil residual value.The company received a grant of GH₵30,000 from the municipal assembly to support the acquisition of the machines. required :Account for this grant under the netting off method. 2. Polycarp Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of Polycarp is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH¢45,000. It was revalued to GH¢54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH¢32,000.Required:Discuss the accounting treatment required in 2018 and 2019 financial statements.
An entity acquired a machine and incurred the following costs: Cash paid for machine, including VAT of 896,000 96,000 Cost of transporting machine Cost of installation 30,000 50,000 Cost of testing machine 40,000 Cost of safety rails and platform surrounding 60,000 machine Cost of water device to keep machine cool 80,000 Cost of adjustment to machine to make it operate more efficiently Cost of repairing damage during installation 75,000 45,000 Cost of spare parts to cover breakdowns 155,000 65,000 Estimated dismantling cost to be incurred as required by contract Insurance cost for the current year 15,000 Cost of training personnel who will use the 25,000 machine What total amount should be capitalized as cost of the machine?
At December 31, 2027, Flint Corporation reported the following plant assets. Land $4,068,000 Buildings $26,700,000 Less: Accumulated depreciation-buildings 16,170,300 10,529,700 Equipment 54,240,000 Less: Accumulated depreciation-equipment 6,780,000 47,460,000 Total plant assets $62,057,700 During 2028, the following selected cash transactions occurred. Apr. 1 Purchased land for $2,983,200. May 1 Sold equipment that cost $813,600 when purchased on January 1, 2021. The equipment was so June 1 Sold land for $2,169,600. The land cost $1,356,000. July 1 Purchased equipment for $1,491,600. Dec. 31 Retired equipment that cost $949,200 when purchased on December 31, 2018. No salvage val (a) Prepare a tabular summary that includes the plant asset accounts and balances shown on the December 31, 2 · Decreases in assets, liabilities, or stockholders' equity require a negative sign or parentheses. -Increases in expenses and losses require a negative sign or parentheses. Increases in Accumulated…
As at 31 December 2020, Aura Plc has a development asset on its Statementof Financial Position of £378,000 in respect of Project Alpha. Project Alphacommenced on 1 July 2020 and costs have been incurred evenly since thatdate. All costs have been capitalised since 1 July 2020.When reviewing the financial statements ahead of year end, it was discoveredthat this project was only determined to be commercially viable from 1 August2020.Which journal entry is required to correct the financial statements of Aura Plcfor the year ended 31 December 2020?a) DEBIT Research costs- Income statement £63,000CREDIT Intangible assets £63,000b) DEBIT Research costs- Income statement £31,500CREDIT Intangible assets £31,500c) DEBIT Intangible assets £63,000CREDIT Research costs- Income statement £63,000d) DEBIT Research costs- Income statement £315,000CREDIT Non-current assets £315,000