INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
9th Edition
ISBN: 9781260180657
Author: SPICELAND
Publisher: MCG
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Textbook Question
Chapter 11, Problem 11.31E
IFRS; impairment;
• LO11–10
IFRS
Refer to the situation described in E 11–30, requirement 1. Alliant prepares its financial statements according to IFRS, and Centerpoint is considered a cash-generating unit. Assume that Centerpoint’s fair value of $220 million approximates fair value less costs to sell and that the present value of Centerpoint’s estimated future
Required:
Determine the amount of goodwill impairment loss Alliant should recognize.
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IAS 36 - Impairment of Assets
Management of an entity is carrying out an impairment test on an asset. The post tax market rate of return from the asset is 7% and profits are taxed at 30%. Management intends to use the post tax rate of return in discounting the post tax cash flows from the asset of €2 million, as management says it will make no difference to the calculation of value-in-use.Explain whether the use of the post tax rate is acceptable in the above circumstances.
Exercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8]
General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product
manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for
the assets at the plant:
Cost
Accumulated depreciation
General's estimate of the total cash flows to be generated by selling the products
manufactured at its Arizona plant, not discounted to present value
The fair value of the Arizona plant is estimated to be $12 million.
Required:
1. Determine the amount of impairment loss.
2. If a loss is indicated, prepare the entry to record the loss.
3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted
instead of $15.4 million and (4) $20.5 million instead of $15.4 million.
Complete this question by entering your answers in the tabs below.
Req 1
$ 34.5 million.
$ 14.4 million
$ 15.4 million…
9. Under PAS 38 Intangible Assets, intangible assets are
amortized
a. using straight-line method applied to the shorter of an
. intangible asset's useful life and legal life
b. using an amortization method that best reflects the pattern
in which the asset's future economic benefits are expected
to be consumed by the entity.
C. using a residual value of zero, except in cases where the
revaluation model if applied.
d. all of these
10. Changes in amortization method, useful life, and residual
value are changes in accounting estimates and are accounted
for
a. prospectively.
b. retrospectively.
C. a or b
d. not accounted
Chapter 11 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
Ch. 11 - Prob. 11.1QCh. 11 - Depreciation is a process of cost allocation, not...Ch. 11 - Identify and define the three characteristics of...Ch. 11 - Discuss the factors that influence the estimation...Ch. 11 - What is meant by depreciable base? How is it...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - Why are time-based depreciation methods used more...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Briefly explain the differences and similarities...Ch. 11 - Prob. 11.12QCh. 11 - Prob. 11.13QCh. 11 - What are some of the simplifying conventions a...Ch. 11 - Explain the accounting treatment required when a...Ch. 11 - Explain the accounting treatment and disclosures...Ch. 11 - Explain the steps required to correct an error in...Ch. 11 - Prob. 11.18QCh. 11 - Prob. 11.19QCh. 11 - Prob. 11.20QCh. 11 - Prob. 11.21QCh. 11 - Briefly explain the differences between U.S. GAAP...Ch. 11 - Under U.S. GAAP, litigation costs to successfully...Ch. 11 - Cost allocation At the beginning of its fiscal...Ch. 11 - Depreciation methods LO112 On January 1, 2018,...Ch. 11 - Depreciation methods; partial periods LO112 Refer...Ch. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Group depreciation; disposal LO112 Mondale Winery...Ch. 11 - Prob. 11.8BECh. 11 - Prob. 11.9BECh. 11 - Prob. 11.10BECh. 11 - Change in principle; change in depreciation method...Ch. 11 - Prob. 11.12BECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.14BECh. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Subsequent expenditures LO119 Demmert...Ch. 11 - Depreciation methods LO112 On January 1, 2018,...Ch. 11 - Prob. 11.2ECh. 11 - Depreciation methods; partial periods LO112 [This...Ch. 11 - Depreciation methods; asset addition; partial...Ch. 11 - Depreciation methods; solving for unknowns LO112...Ch. 11 - Depreciation methods; partial periods LO112 On...Ch. 11 - Prob. 11.7ECh. 11 - IFRS; depreciation; partial periods LO112, LO1110...Ch. 11 - IFRS; revaluation of machinery; depreciation;...Ch. 11 - Disposal of property, plant, and equipment LO112...Ch. 11 - Disposal of property, plant, and equipment;...Ch. 11 - Depreciation methods; disposal; partial periods ...Ch. 11 - Group depreciation LO112 Highsmith Rental Company...Ch. 11 - Double-declining-balance method; switch to...Ch. 11 - Prob. 11.15ECh. 11 - Prob. 11.16ECh. 11 - Cost of a natural resource; depletion and...Ch. 11 - Prob. 11.18ECh. 11 - Prob. 11.19ECh. 11 - Prob. 11.20ECh. 11 - Prob. 11.21ECh. 11 - Change in estimate; useful life and residual value...Ch. 11 - Change in principle; change in depreciation...Ch. 11 - Change in principle; change in depreciation...Ch. 11 - Prob. 11.25ECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - IFRS; Impairment; property, plant, and equipment ...Ch. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.30ECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Prob. 11.32ECh. 11 - FASB codification research LO118 The FASB...Ch. 11 - Prob. 11.34ECh. 11 - Subsequent expenditures LO119 Belltone Company...Ch. 11 - Prob. 11.36ECh. 11 - Concept s; terminology LO111 through LO116, LO118...Ch. 11 - Retirement and replacement depreciation Appendix...Ch. 11 - Depreciation methods; change in methods LO112,...Ch. 11 - Prob. 11.2PCh. 11 - Depreciation methods; partial periods Chapters 10...Ch. 11 - Partial- year depreciation; asset addition;...Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Prob. 11.7PCh. 11 - Prob. 11.8PCh. 11 - Straight-line depreciation; disposal; partial...Ch. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Prob. 11.12PCh. 11 - Depreciation and depletion; change in useful life;...Ch. 11 - Analysis Case 111 Depreciation, depletion, and...Ch. 11 - Communication Case 112 Depreciation LO111 At a...Ch. 11 - Judgment Case 113 Straight-line method; composite...Ch. 11 - Prob. 11.4BYPCh. 11 - Prob. 11.5BYPCh. 11 - Prob. 11.7BYPCh. 11 - Prob. 11.8BYPCh. 11 - Research Case 119 FASB codification; locate and...Ch. 11 - Ethics Case 1110 Asset impairment LO118 At the...Ch. 11 - Prob. 11.11BYPCh. 11 - Prob. 11.13BYPCh. 11 - Real World Case 1114 Disposition and depreciation;...Ch. 11 - Real World Case 1115 Depreciation and depletion...Ch. 11 - Prob. 11.16BYPCh. 11 - Target Case LO112, LO118, LO119 Target...
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- Exercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8] General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost Accumulated depreciation General's estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value The fair value of the Arizona plant is estimated to be $19.5 million. Required: 1. Determine the amount of impairment loss. 2. If a loss is indicated, prepare the entry to record the loss. 3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is (3) $19.5 million instead of $18.4 million and (4) $34.25 million instead of $18.4 million. Complete this question by entering your answers in the tabs below.…arrow_forwardRefer to the situation described in BE 11–16. Assume that SCC’s fair value of $40 million approximates fairvalue less costs to sell and that the present value of SCC’s estimated future cash flows is $41 million. If WebHelper prepares its financial statements according to IFRS and SCC is considered a cash-generating unit, whatamount of impairment loss, if any, should WebHelper recognize?arrow_forwardWhich statement is INCORRECT about subsequent measurement of intangible assets? Q7 Select one: a. When using the cost model an entity should estimate the estimated useful life as well as the estimated residual value if the asset is determined to have an indefinite useful life b. When using the cost model an entity should estimate the estimated useful life as well as the estimated residual value if the asset is determined to have a definite useful life. c. The same model chosen by an entity should be used for all intangible assets in the same class. d. Intangible assets may be measured using either the cost model or the revalued cost model.arrow_forward
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