Advanced Accounting
12th Edition
ISBN: 9781305464803
Author: FISCHER
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 1, Problem 1.1CC
To determine
Goodwill impairment refers to the expense which is recorded when the fair value of the goodwill is less than the carrying value of the goodwill. The impairment loss is recorded when the company finds that the goodwill recorded earlier has been impaired.
Recording of goodwill impairment:
- Impairment of goodwill is computed by using the book value and the fair value of the goodwill.
- The carrying value of the goodwill is compared with the book value of the goodwill. The auditor can compute the implied fair value of the goodwill, and it can be ensured whether the impairment is recorded on goodwill or not.
- The impairment is treated as a loss, and it is recorded as a loss in the income statement. The carrying value of the goodwill is reduced with the amount of impairment loss.
Impairment loss:
The loss which is incurred due to change in the carrying value of the asset or business is called as impairment loss.
Fair value of the asset:
Fair value of the asset is the amount at which two parties may enter into an agreement with open hand.
:
Whether the goodwill has been impaired or not.
To calculate the adjustment to goodwill and to do the required entry if it has been impaired.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The information provided to you is as follows:
Purchase of machinery (!/9/2019) instead of € 32,400 with cash was registered as a purchase of different materials of equal value. The result of the error was to calculate and recognize the consumption of the various materials (theentire amount of the various materials) and not to calculate the depreciation of the machines (annual depreciation 3.240 €). Correction of accounting error is carried out 1/1/2020. The correction record is requested a) if the error was found in the fiscal year (2020) and b) if the error was found in the next financial year (2021) i.e. the error while the correction entry was made in 2020 takes place on 1/1/2021.
Which of the following accounting policies is an example of costs versus benefits constraint being exercised in the disclosure of financial information?
Inventory is valued at lower of cost or market.
Property, plant and equipment are appraised and revalued every three years.
Biological assets are stated at fair value unless the fair value cannot be measured reliably.
Research and development costs are expensed as incurred.
Provide the term that best describes the statement in Column A. In your answer book just write the letter from column A with the correct term from Column B.
Column A
Column B
A. Resources controlled by the entity for less than one year as a result of a past event from which future economic benefits are expected to likely to flow into the entity.
Allowances for credit losses adjustment
B. The account credited when recording the depreciation adjustment.
Accrual concept
C. The supporting document used for the depreciation entry.
Income received in advance
D. The difference between the original cost and the accumulated depreciation of the asset.
Accrued income
E. When the selling price is less than the carrying value.
Consumable stores on hand
F. The concept where all expenses is assigned to the financial period in which they were incurred.
Carrying value
G. The account to be debited when recording the…
Chapter 1 Solutions
Advanced Accounting
Ch. 1 - Prob. 1UTICh. 1 - Prob. 3UTICh. 1 - Prob. 4UTICh. 1 - Prob. 5UTICh. 1 - Prob. 6UTICh. 1 - Prob. 7UTICh. 1 - Prob. 8UTICh. 1 - Prob. 9UTICh. 1 - Prob. 10UTICh. 1 - Prob. 1.1E
Ch. 1 - Prob. 1.2ECh. 1 - Prob. 1.3ECh. 1 - Prob. 2ECh. 1 - Prob. 5.1ECh. 1 - Prob. 5.2ECh. 1 - Prob. 6ECh. 1 - Lake craft Company has the following balance...Ch. 1 - Prob. 8.2ECh. 1 - Prob. 8.3ECh. 1 - Prob. 9.1ECh. 1 - Prob. 9.2ECh. 1 - Prob. 1A.1.1AECh. 1 - Prob. 1A.1.2AECh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3.1PCh. 1 - Prob. 1.4PCh. 1 - Jack Company is a Corporation that was organized...Ch. 1 - Prob. 1.6PCh. 1 - Prob. 1.7.1PCh. 1 - Prob. 1.7.2PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.10.A1PCh. 1 - Prob. 1.11PCh. 1 - Prob. 1.12PCh. 1 - Prob. 1.13.2PCh. 1 - Prob. 1A.1.1APCh. 1 - Prob. 1A.1.2APCh. 1 - (Note: The use 01 a financial calculator or Excel...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Prob. 1.1B.3CCh. 1 - Prob. 1.1CCCh. 1 - Prob. 1.2.1CCh. 1 - Prob. 1.2.2CCh. 1 - Case 1-2 Disney Acquires Marvel Entertainment On...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- For each of the following independent scenarios, determine if each event is an accounting change, error, or neither. For each accounting change or error determine the method that should be used to account for the change or error in the current year financial statements: retrospective adjustment, prospective, or prior period adjustment. Change from LIFO to FIFO Inventory Method. - NEITHER Change in useful life of equipment from 10 years to 7 years. Accounting Error Change in depreciation method from Double Declining Balance to Straight Line. Write-down of inventory due to obsolescence. Settlement of lawsuit and receipt of damages from 5 years prior. Write-off of patent due to competing product. Prior year costs were recorded as expenses instead of Property, Plant and Equipment. Change in Allowance for Uncollectible Accounts due to increase in unpaid Accounts Receivable, changes estimate from 4% of credit sales to 6%.arrow_forwardWhich of the following best describes an accelerated depreciation method? A. A method by which an equal amount of expense is assigned for every full year of use. B. A method by which depreciation is based on the level of actual usage rather than the passage of time. C. A method of determining depreciation which assigns larger expenses to the initial years of an asset’s service and smaller expenses to the later years. D. A method of allocating the cost of a wasting asset to expense over the periods during which the value is removed from the property.arrow_forwardIf the estimated useful life of equipment changes, then this change requires OO a retroactive change in the amount of the periodic depreciation recognized in previous years. that income for the current year be increased. that the amount of the periodic depreciation be changed in the current year and in future years. that no change be made in the periodic depreciation so that depreciation amounts are comparable over the life of the asset. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- Jupiter Ltd. follows the straight-line method of depreciation for the year 2014. It shifts to the written-down value method in 2015 and back to the straight-line method in 2016. What accounting concept is being violated? Materiality concept Going concern concept Matching concept Consistency conceptarrow_forwardWhich of the following statements is true for real rental property that has been depreciated using the mid-month convention in the year of disposition? (a) The depreciation in the year of disposition will be the same as the depreciation in a regular year. (b) The deductible amount will be half the depreciation determined for the full year. (c) The deductible amount will be determined by the month in which the asset is disposed. (d) Using information from the MACRS percentage tables, the calculation is made based on a short tax year.arrow_forwardProfit before tax for Juventus is estimated at $3,000,000 for the year ended June 30, 2019, during the audit, the team has identified the following errors:i. An error of $3,000 was found in the audit of depreciation expense of the warehouse purchased in January 2019. The management of Juventus have indicated that they do not wish to amend the financial statements. Calculate Performance Materiality and utilize this to discuss the appropriate treatment of the above error.arrow_forward
- Which of the following options would most likely improve the timeliness of your company's financial statements? Question 1 options: decreasing the estimates of useful life of property, plant, and equipment. changing the timing of when revenues are recognized. changing from quarterly financial statements to monthly financial statements. increasing the number of disclosures in the notes to the statement. Fundamental qualitative characteristics include: Question 2 options: representational faithfulness and timeliness. relevance and representational faithfulness. materiality and verifiability. relevance and comparability.arrow_forwardInternally Developed Computer Software Required: Based on the result of your audit, determine the following:____________1. Total Research and Development Costs to be expensed in 2011____________2. Amount to be capitalized as software development cost subject to amortization in 2012____________3. Amortization of software development cost in 2012____________4. Carrying value of software development cost on December 31, 2012____________5. Amount of Ending Inventory on December 31,2012arrow_forwardRequired Prepare a schedule showing the reconciliation of beginning balances to ending balance of biological assets and the changes during the period due to purchase and change in fair value. Compute for the change in fair value less cost to sell of the biological asset due to Price change and Physical change Reconcile the ending balance computed in (a) with the fair value less cost to sell of the animals at December 31, 2016 Give the entries for 2017 to record the foregoing information.arrow_forward
- REQUIRED: A. Based on the application of the necessary procedures and appreciation of the above data, you are to provide the answers to the following: 1. What is the gain on sale of truck on September 30? 2. What is the gain on sale of machinery on December 20? 3. What is the adjusted balance of the cost of property, plant and equipment as of December 31, 2022? 4. What is the total depreciation expense for the year ended December 31, 2022? 5. What is the carrying amount of the property, plant and equipment as of December 31, 2022? B. Show the lapsing schedule as of December 31, 2022.arrow_forwardRay Solutions decided to make the following changes in its accounting policies on January 1, 2016: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service contracts. b. Adopted straight-line depreciation for all future equipment purchases, but continued to use accelerated depreciation for all equipment acquired before 2016. c. Changed from the LIFO inventory method to the FIFO inventory method. Required: For each accounting change Ray undertook, indicate the type of change and how Ray should report the change. Be specific.arrow_forwardQUESTIONS. A. Based on the above and the result of your audit, answer the following(Round off present value factors to four decimal places and final answers to nearest hundred) 1. The consultation service fee revenue that should be recognized in 2022 is 2. The gain on We of equipment that -should be recognized in 2022 is 3. The noncurrent notes receivable as of December 31, 2022 isarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License