Last itd has two divisions, Time and Leisure. Each of these is regarded as a separate CGU.At 31 December 2019, the carrying amounts of the assets of the two divisions were as follows.TimeLeisure$1 500(650)240Plant$1200(375)Accumulated depreciationPatentInventories54ReceivablesGoodwill7582752520The receivables were regarded as collectable, and the inventories fair value less costs of disposal wadisposal of $220. The plant at Time was depreciated at $300 p.a, and that at Leisure was depreciatedLast Itd undertook impairment testing at 31 December 2019, and determined the recoverable amountTime$1044Leisure990As a result, management increased the depreciation of the Time plant from $300 to $350 p.a. for the yBy 31 December 2020, the performance in both divisions had improved, and the carrying amounts of tifollows.TimeLeisureCarrying amountRecoverable amount$13221502$14331520RequiredDetermine how Last Ltd should account for the results of the impairment tests at both 31 December 20e here to search

Impairment: Asset is impaired when carrying value on the balance sheet is higher than fair value of…

Last Ltd has two divisions, Time and Leisure. Each of these is regarded as a separate CGU. At 31 December 2019, the carrying amounts of the assets of the two divisions were as follows. Time Lelsure Plant Accumulated depreciation Patent Inventories Recelvables Goodwill $1 500 (650) 240 54 75 25 $1200 (375) 75 82 20 The receivables were regarded as collectable, and the inventories fair value less costs of disposal wa disposal of $220. The plant at Time was depreciated at $300 p.a, and that at Leisure was depreciatec Last Ltd undertook impairment testing at 31 December 2019, and determined the recoverable amoun Time Leisure $1044 990 As a result, management increased the depreciation of the Time plant from $300 to $350 p.a. for the y By 31 December 2020, the performance in both divisions had improved, and the carrying amounts of t follows. Time Leisure Carrying amount Recoverable amount $1322 1502 $1433 1520 Required Determine how Last Ltd should account for the results of the impairment tests at both 31 December 20

Last Ltd has two divisions, Time and Leisure. Each of these is regarded as a separate CGU. At 31 December 2019, the carrying amounts of the assets of the two divisions were as follows. Time Lelsure Plant Accumulated depreciation Patent Inventories Recelvables Goodwill $1 500 (650) 240 54 75 25 $1200 (375) 75 82 20 The receivables were regarded as collectable, and the inventories fair value less costs of disposal wa disposal of $220. The plant at Time was depreciated at $300 p.a, and that at Leisure was depreciatec Last Ltd undertook impairment testing at 31 December 2019, and determined the recoverable amoun Time Leisure $1044 990 As a result, management increased the depreciation of the Time plant from $300 to $350 p.a. for the y By 31 December 2020, the performance in both divisions had improved, and the carrying amounts of t follows. Time Leisure Carrying amount Recoverable amount $1322 1502 $1433 1520 Required Determine how Last Ltd should account for the results of the impairment tests at both 31 December 20

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 10RE

See similar textbooks

Similar questions

On 1 January 2019, Bad Ltd acquired all the assets and liabilities of Wolf Ltd. Wolf Ltd has several operating divisions, including one whose major industry is the manufacture of toy trains, particularly those of historical significance. The toy trains division is regarded as a CGU. In paying $2 million for the net assets of Wolf Ltd, Bad Ltd calculated that it had acquired goodwill of $240 000. The goodwill was allocated to each of the divisions, and the assets and liabilities acquired meas-red at fair value at acquisition date. At 31 December 2021, the carrying amounts of the assets of the toy train division were: Factory $250 000 Inventory $150 000 Brand — ‘Froggy’ $50 000 Goodwill $50 000 Total 500 000 There is a declining interest in toy trains because of the aggressive marketing of computer-based toys, so the management of Bad Ltd measured the value in use of the toy train division at 31 December 2021, determining it to be $423 000.…
On December 1, 2021, Violet Company committed to a plan to dispose of the assets of a business component. The disposal meets the requirements to be classified as discontinued operation. On that date, the entity estimated that the loss from the disposition of the assets would be P700,000 and the component’s operating income was P200,000. What amount of pretax loss should be reported for discontinued operation for 2021? A. 900,000 B. 700,000 C. 200,000 D. 500,000 E. None of them
Barbay Ltd has two divisions. It acquired one of them, Tibay Products, on January 1, 2022 for $400,000, and recorded goodwill of $50,750 as a result of that purchase. If at December 31, 2022, Tibay Products will have a recoverable amount of $370,000 and carrying value of its net assets of $355,000 (including goodwill). What amount of loss on impairment of goodwill should Barbay Ltd record in 2022, if any?
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.
Grand Champion Inc. purchased America’s Sweethearts Corporation on January 1, 2019. At the time, America’s Sweethearts had the following assets and liabilities (stated at fair value): Cash $62,000 Accounts receivable 138,000 Inventory 185,000 Property, plant, and equipment 300,000 Patent 65,000 Accounts payable 200,000 Notes payable 325,000 Grand Champion paid $900,000 for America’s Sweethearts. Assume that America’s Sweethearts is a reporting unit of Grand Champion. At the end of 2020, America’s Sweethearts has a fair value of $720,000 and a book value of $850,000, which includes any goodwill recorded. Of this fair value, $350,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities. Required: Calculate the impairment loss of goodwill (if any) and record the appropriate journal entry.
Barbay Ltd has two divisions. It acquired one of them, Tibay Products, on January 1, 2022 for $400,000, and recorded goodwill of $50,750 as a result of that purchase. If at December 31, 2022, Tibay Products will have a recoverable amount of $370,000 and carrying value of its net assets of $355,000 (including goodwill). What amount of loss on impairment of goodwill should Barbay Ltd record in 2022, if any? $Answer
On July 1, 2018, the company adopted a plan to discontinue a division that qualifies as a component of an entityas defined by GAAP. The assets of the component were sold on September 30, 2018, for $50,000 less than theirbook value. Results of operations for the component (included in the above account balances) were as follows:1/1/2018–9/30/2018 2017Sales $400,000 $500,000Cost of goods sold (290,000) (320,000)Administrative expenses (50,000) (40,000)Selling expenses (20,000) (30,000)Operating income before taxes $ 40,000 $110,000In addition to the account balances above, several events occurred during 2018 that have not yet been reflectedin the above accounts:1. A fire caused $50,000 in uninsured damages to the main office building. The fire was considered to be aninfrequent but not unusual event.2. Inventory that had cost $40,000 had become obsolete because a competitor introduced a better product. Theinventory was sold as scrap for $5,000.3. Income taxes have not yet been…
On January 1, 2021, Deer Company had a division that met the criteria for discontinuance of a business component. For the period January 1 through October 15, 2021, the component had revenue of P500,000 and expenses of P800,000. The assets of the component were sold on October 15, 2021 at a loss of P100,000. How should Deer report the component's operation for 2021?
Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021, the entity classified a land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at P5,500,000 and the cost of disposal at P100,000. On December 31,2021, the fair value less cost of disposal of the land did not change. The land was sold on January 31,2022 for P6,000,000. Required: 1. What is the adjusted carrying amount of the land on December 31,2021? a. 5,000,000 b. 5,500,000 c. 5,400,000 d. 3,500,000
Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021, the entity classified a land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at P5,500,000 and the cost of disposal at P100,000. On December 31,2021, the fair value less cost of disposal of the land did not change. The land was sold on January 31,2022 for P6,000,000. Required: 1. What is the adjusted carrying amount of the land on December 31,2021? a. 5,000,000 b. 5,500,000 c. 5,400,000 d. 3,500,000 2. What amount should be reported as impairment loss for 2021? a. 100,000 b. 400,000 c. 500,000 d. 0 3. What amount should be reported as revaluation surplus on December 31,2021? a. 1,500,000 b. 2,000,000 c. 1,000,000 d. 1,900,000 4. What amount should be reported as gain on disposal of land in 2022? a. 1,000,000 b. 2,600,000 c. 500,000 c. 600,000
Reichenbach Co., organized in 2019, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2020 and 2021. Intangible Assets 7/1/20 8-year franchise; expiration date 6/30/25 $ 48,000 10/1/20 Advance payment on laboratory space (2-year lease) 24,000 12/31/20 Net loss for 2020 including state incorporation fee, $1,000, and related legal fees of organizing, $5,000 (all fees incurred in 2020) 16,000 1/2/21 Patent purchased (10-year life) 84,000 3/1/21 Cost of developing a secret formula (indefinite life) 75,000 4/1/21 Goodwill purchased (indefinite life) 278,400 6/1/21 Legal fee for successful defense of patent purchased above 12,650 9/1/21 Research and development costs 160,000 Instructions Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2021,…
An entity had the following events and transactions during 2020:- Depreciation for 2019 was understated by P500,000- A litigation settlement resulted in a loss of P2,000,000- The inventory on December 31, 2018 was overstated by P800,000- The entity disposed of a recreational division at a loss P1,500,000- The income tax rate is 30%What total amount of loss should be included in income from continuing operations for 2020? a. 2,000,000 c. 3,500,000 b. 1,400,000 d. 2,450,000 EXPLAIN THE ANSWER.