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
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- Coronado Landscaping Limited has determined that its lawn maintenance division is a cash-generating unit under IFRS. The carrying amounts of the division’s assets at December 31, 2020, are as follows: Land $26,000 Building 58,000 Equipment 34,000 Vehicles 16,000 $134,000 The lawn maintenance division has been assessed for impairment and it is determined that the division’s value in use is $120,600, fair value less costs to sell is $89,000, and undiscounted future net cash flows are $158,000. BCoronado Landscaping Limited has determined that its lawn maintenance division is a cash-generating unit under IFRS. The carrying amounts of the division’s assets at December 31, 2020, are as follows: Land $26,000 Building 58,000 Equipment 34,000 Vehicles 16,000 $134,000 The lawn maintenance division has been assessed for impairment and it is determined that the division’s value in use is $120,600, fair value less costs to sell is $89,000, and undiscounted future net cash flows are $158,000. Assume that Coronado prepares financial statements under ASPE instead, and that the lawn maintenance division is an asset group. Determine if the asset group is impaired and prepare the journal entry, if any, to record the impairment at December 31, 2020, assuming that none of the individual assets in the division has a determinable recoverable amount. The question part only has 2 lines. (as following screenshot)Gandaph Corporation purchased a division five years ago for $ 3 million. The division has been identified as a reporting unit that is cash-generating under IFRS. Management is reviewing the division for impairment of goodwill and has estimated the fair value of the reporting unit to be $ 3.28 million and the unit’s value in use to be $ 3.45 million. In addition, there would be $ 85,000 in direct costs should the company decide to sell. The carrying amounts of the division’s net assets, including the associated goodwill of $ 1,450,000, are listed below. Carrying Amount of Net Assets Including Goodwill Cash $ 300,000 Receivables 450,000 Inventory 1,050,000 Property, plant, and equipment (net) 1,200,000 Goodwill 1,450,000 Less: Accounts and notes payable (750,000) Net assets, at carrying amounts $ 3,700,000 Required: Determine if goodwill is impaired and provide the related journal entries, if any, under both ASPE and IFRS.
- Celina Company incurred the following research and developments costs in the current year: Materials used in research and development projects. 400,000Equipment acquired that will have alternate future use in future Research and Development projects 2,000,000 Depreciation on above equipment. 500,000Personnel costs of persons involved in research and development projects. 1,000,000Consulting fees paid to outsiders for research and development projects. 100,000 Indirect costs reasonably allocable to research and development projects. 200,000 What amount of research and development costs should be expensed in current year? A. 1,500,000 B. 1,700,000 C. 2,200,000 D. 3,500,000During the current accounting period, Jack Ltd considered the recognition of the following costs as intangible assets. GHS 40,000 spent on evaluating research findings GHS 60,000 spent on acquiring a brand name from a competitor GHS 50,000 spent on acquiring the legal rights to a production process, without which Jack Ltd’s business cannot function In accordance with IAS 38 Intangible Assets, what is the maximum amount that Jack Ltd could recognize as intangible assets?Hoyle Company owns a manufacturing plant with a fair value of $4,600,000, a recorded cost of $8,500,000, and accumulated depreciation of $3,650,000. Patterson Company owns a warehouse with a fair value of $4,400,000, a recorded cost of $6,900,000, and accumulated depreciation of $2,800,000. Hoyle and Patterson exchange assets, with Hoyle also receiving cash of $200,000 from Patterson. The exchange is considered to have commercial substance. Required: Record the exchange on the books of: Hoyle Patterson
- Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?Tettleton Company incurred the following costs during the current year in con- nection with its research and development activities: Cost of equipment acquired that will have alternative uses in future research and development projects over the next 5 years (uses straight-line depreciation) : $300,000 Materials consumed in research and development projects $65,000 Consulting fees paid to outsiders for research and developement projects: $123,000 Personnel costs of persons involved in research and development projects: $315,000 Indirect costs reasonably allocable to research and development projects $44,000 Materials purchased for future research and development projects $72,000 Compute the amount to be reported as research and development expense by Tettleton on its income statement for the current year. Assume equipment is purchased at the beginning of the year.During the current fiscal year, Heinrich Corp. incurred the following costs related to property, plant, and equipment: Amount paid to the contractor for the building constructed P13,000,000 Building permit fee 120,000 Excavation cost 110,000 Architect fee 440,000 Interest that would have been earned had the money used during the period of construction been invested in the money market 330,000 Invoice cost of machine acquired, terms 3/10, n/30 6,500,000 Freight, unloading and delivery charges for machine acquired 100,000 Custom duties and other charges 270,000 Allowance and hotel accommodation, paid to foreign technicians during installation and test run of machine 520,000 Royalty payment on machines purchased (based on units produced and sold) 240,000 Cash paid for the purchase of land (none was allocated to old building) 10,000,000 Mortgage assumed on the land purchased 2,100,000 Realtor’s commission 650,000 Legal fees, realty taxes and documentation expenses 900,000 Amount…
- Impairment is defined as a reduction in the value of a company asset, whether fixed or intangible which decline the asset's quality, quantity, or market value. (a) The carrying amount of a machinery is RM525,000. This consists of goodwill of RM75,000, development costs of RM150,000 and machinery of RM300,000. The machinery has a recoverable amount of RM330,000. Calculate the carrying amount of the machinery after the impairment loss has been allocated.Impairment is defined as a reduction in the value of a company asset, whether fixed or intangible which decline the asset's quality, quantity, or market value. (a) The carrying amount of a machinery is RM525,000. This consists of goodwill of RM75,000, development costs of RM150,000 and machinery of RM300,000. The machinery has a recoverable amount of RM330,000. Calculate the carrying amount of the machinery after the impairment loss has been allocated. (b) Syarikat Alfa has a year-end of 31 December and operates a factory which makes computer chips for mobile phones. It purchased a machine on 1 July 2016 for RM80,000 which had a useful life of ten years and is depreciated on a straight-line basis, time apportioned in the years of acquisition and disposal. The machine was revalued to RM81,000 on 1 July 2017. There was no change to its useful life at that date. A fire at the factory on 1 October 2019…Hall Co. incurred research and development costs in 2021 as follows: Materials used in research and development projects $950,000 Equipment acquired that will have alternate future uses in future research and development projects 3,000,000 Depreciation for 2021 on above equipment 500,000 Personnel costs of persons involved in research and development projects 750,000 Consulting fees paid to outsiders for research and…