ACCY 200 Chapter 9 solutions

1050 WordsJan 4, 20145 Pages
QUESTION 9.2 NARRABRI LTD The carrying amount of the assets of the Toy Train Division is $500 000. If the value in use is $423 000, then there is an impairment loss of $77 000. The impairment loss is firstly used to write off the goodwill - $50 000. The balance of the loss - $27 000 – is allocated across the other assets, except for inventory assuming it is recorded at the lower of cost and net realisable value: Carrying Proportion Allocation Net Carrying Amount of Loss Amount Factory 250 000 5/6 22 500 227 500 Brand 50 000 1/6 4 500 45 500 300 000 27 000 The journal entry to record the impairment loss is: Impairment loss Dr 77 000 Goodwill Cr 50 000 Accumulated depreciation and impairment…show more content…
The reversal is then accounted for as follows: Land Dr 3 600 Accumulated depreciation & impairment losses - plant Dr 9 400 Income – reversal of impairment loss Cr 13 000 QUESTION 9.12 ARARAT LTD 3 divisions are CGUs Head office and research centre are not CGUs Allocate head office assets to each division Determine impairment of research centre with entity as a whole Step 1: Calculate impairment loss Adjust the carrying amounts of the CGUs for the allocatable corporate asset (head office) and compare with value in use to determine impairment loss. Aramac Alpha Amby Carrying amounts of assets 1 400 000 980 000 740 000 Allocation of head office assets 60 000 60 000 60 000 1 460 000 1 040 000 800 000 Value in use 1 550 000 1 000 000 750 000 Impairment loss ______0 (40 000) (50 000) Step 2: Allocate impairment loss Alpha Division Carrying Proportion Allocation Adjusted Amount of loss carrying Amount Head office 60 000 60/760 3 158 Land 280 000 280/760 14 736 265 264 Plant 420 000 420/760 22 106 397 894 760 000 40 000 The journal entry is: Impairment loss Dr 36 842 Land Cr 14 736 Accumulated depreciation and impairment loss – plant Cr 22 106 (Impairment loss – Alpha division) QUESTION 9.12 (cont’d) Amby Division Carrying Proportion Allocation Adjusted Amount of loss carrying Amount Head office 60 000 60/600 5 000 Land

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