The fair value of the net identifiable assets of Pax Limited are determined as follows: ($000) Patent rights 200 Machinery 1,000 Buildings 1,500 Land 2,300 5,000 Less: Bank loan 600 Net assets 4,400 At the end of the reporting period of 30 June 2019, the management of Snowy Ltd determines that the 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, is unchanged 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 determines that 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.
The fair value of the net identifiable assets of Pax Limited are determined as follows:
($000)
Patent rights 200
Machinery 1,000
Buildings 1,500
Land 2,300
5,000
Less: Bank loan 600
Net assets 4,400
At the end of the reporting period of 30 June 2019, the management of Snowy Ltd determines that
the 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
unchanged and remains at $4,400,000.
Required:
a) Prepare the
b) Assume instead that at the end of the reporting period the management of Snowy Ltd determines
that 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.
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