Chapter 4, Problem 23E

Declarmen Corporation owns a factory in the United Kingdom. A change in business climate indicates that Declarmen should investigate for possible impairment. Below are date related to the factory’s assets ($ in millions): Book value $ 570 Undiscounted sum of future estimated cash flows 630 Present value of future cash flows 525 Fair value less cost to sell (determined by appraisal) 540 The amount of impairment loss that Declarmen should recognize according to International Financial Reporting Standards is:

On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2014 financial statements stated in Swiss francs are given below. GRANT MANAGEMENT CONSULTANTSComparative Balance SheetsJanuary 1 and December 31, 2014     Jan. 1   Dec. 31 Cash and Receivables   20,300   55,200 Net Property, Plant, and Equipment   39,600   36,800    Totals   59,900   92,000 Accounts and Notes Payable   30,200   31,500 Common Stock   19,600   19,600 Retained Earnings   10,100   40,900    Totals   59,900   92,000 GRANT MANAGEMENT CONSULTANTSConsolidated Income and Retained Earnings Statementfor the Year Ended December 31, 2014 Revenues   76,300 Operating Expenses including Depreciation of 2,800 francs   30,400 Net Income   45,900 Dividends Declared and Paid   15,100 Increase in Retained Earnings   30,800 Direct exchange…

On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2014 financial statements stated in Swiss francs are given below. GRANT MANAGEMENT CONSULTANTSComparative Balance SheetsJanuary 1 and December 31, 2014     Jan. 1   Dec. 31 Cash and Receivables   20,300   55,200 Net Property, Plant, and Equipment   39,600   36,800    Totals   59,900   92,000 Accounts and Notes Payable   30,200   31,500 Common Stock   19,600   19,600 Retained Earnings   10,100   40,900    Totals   59,900   92,000 GRANT MANAGEMENT CONSULTANTSConsolidated Income and Retained Earnings Statementfor the Year Ended December 31, 2014 Revenues   76,300 Operating Expenses including Depreciation of 2,800 francs   30,400 Net Income   45,900 Dividends Declared and Paid   15,100 Increase in Retained Earnings   30,800 Direct exchange…

On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2014 financial statements stated in Swiss francs are given below. GRANT MANAGEMENT CONSULTANTSComparative Balance SheetsJanuary 1 and December 31, 2014     Jan. 1   Dec. 31 Cash and Receivables   20,300   55,200 Net Property, Plant, and Equipment   39,600   36,800    Totals   59,900   92,000 Accounts and Notes Payable   30,200   31,500 Common Stock   19,600   19,600 Retained Earnings   10,100   40,900    Totals   59,900   92,000 GRANT MANAGEMENT CONSULTANTSConsolidated Income and Retained Earnings Statementfor the Year Ended December 31, 2014 Revenues   76,300 Operating Expenses including Depreciation of 2,800 francs   30,400 Net Income   45,900 Dividends Declared and Paid   15,100 Increase in Retained Earnings   30,800 Direct exchange…

Alvarez and Reymond, both NGAs, exchanged their equipment. Relevant data is presented below             Alvarez      Reymond  Carrying amount 85,000 130,000 Fair value 95,000 115,000 Cash paid by Alvarez to Reymond 15,000   How much is the initial measurement of the equipment received by Reymond if the exchange has a commercial substance? Refer to the previous question, how much is the gain (loss) recognized by Reymond?

Presented below is selected information related to Martin Burke Inc. at year-end. All these accounts have debit balances. Cable television franchises Film contract rights Music copyrights Customer lists Research and development costs Prepaid expenses Goodwill Covenants not to compete Cash Brand names Discount on notes payable Notes receivable Accounts receivable Investments in affiliated companies Property, plant, and equipment Organization costs Internet domain name Land Instructions Identify which items should be classified as an intangible asset. For those items not classified as an intangible asset, indicate where they would be reported in the financial statements.

One of the main differences between U.S. GAAP and IAS/IFRS is the measurement of property, plant & equipment subsequent to initial recognition.  Read IAS 16 and answer the following questions.  Provide a list of the references you have used to search this topic. What additional disclosures should be made if property, plant & equipment are stated at revalued amounts?     Explain the effect on the company’s financial statements if a company switches from the historical cost principle to the revaluation model?  How should this change be accounted for in the financial statements?

1.Which of the following is not a criterion for classifying an asset as current?   -It is expected to be realized within twelve months after the reporting period. -It is expected to be realized, or intended for sale or consumption in the normal course of the entity’s normal operating cycle. -It is a cash and cash equivalent restricted for the purchase of a non-current asset within 12 months after the reporting period. -It is held primarily for the purpose of being traded.   2.All of the following are essential characteristics of an intangible assets, except   -Expected future economic benefits. -Controlled by the enterprise. -identifiability -Indefinite useful life.   3.The admission of a new partner to an existing partnership   -requires purchasing the interest of one or more existing partners. -causes a legal dissolution of the existing partnership. -may be accomplished only by investing assets in the partnership. -is almost always accompanied by the…

Item 22   Below is information relative to an exchange of similar assets by a company. Assume the exchange has commercial substance. Old Equipment Cash Book Value Fair Value Paid $ 49,700 $ 60,500 $ 14,100 The company would record the new equipment at: