Finsbury Co has a cash generating unit (CGU) that suffers a largedrop in income due to reduced demand for its products. Animpairment review was carried out and the recoverable amount ofthe cash generating unit was determined at $100m. The assets ofthe CGU had the following carrying amounts immediately prior tothe impairment:$mGoodwill25Intangibles60Property, plant and equipment30Inventory15Trade receivables10140The inventory and receivables are considered to be included at theirrecoverable amounts.What is the carrying amount of the intangibles once theimpairment loss has been allocated?A$45mВ$50mC$55mD$60m

Answer- Step 1 - Calculation of Total impairment Loss - Carrying Cost of Assets…

Answered: Finsbury Co has a cash generating unit…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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At 30 June 2017, there was an indication that Botany Ltd's machinery might be impaired. In preparing for the impairment testing, you have estimated, as at 30 June 2017, the piece of machinery's fair value less costs of disposal to be $350 000 and its value in use to be $354 000. The machinery had been purchased and installed on 1 October 2016 for $625 000 cash, with a residual value of $25 000 and useful life of 10 years. Botany Ltd uses the straight-line method of depreciation for this machinery. What would be the impairment loss recorded at 30 June 2017?
Sunnyskies Ltd is an Australian business that manufactures solar panels for domestic use. The assessment of internal and external indicators in the 2020-21 period suggested that an impairment loss was probable. At 30 June 2021, Sunnyskies Ltd reported the following assets and recoverable amount Cash $80,000 Solar panels inventory 260,000 Trademark 240,000 Factory at cost 2,400,000 Accumulated depreciation – factory (600,000) Machinery for manufacturing solar panels 1,100,000 Accumulated depreciation – machinery (300,000) Goodwill on acquisition of competing companies 120,000 Total assets $3,300,000 Recoverable amount $2,800,000 Required: Prepare the journal entry(ies) for any impairment loss occurring at 30 June 2021.
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The following previously unreported intangible assets were acquired by a U.S. company in a business combination. Their beginning-of- current-year book values and allocation to reporting units are listed below. Trade names Distribution network Goodwill Trade names Distribution network Reporting Unit #1 Reporting Unit #2 $14,000 Both identifiable intangibles have a 5-year remaining life. Information for year-end impairment testing is as follows: Sum of Expected Sum of Expected Future Undiscounted Future Discounted Cash Flows Cash Flows 70,000 Select one: O a. $7,700 O b. $5,040 C. $9,240 d. $7,000 $11,200 56,000 $12,600 8,400 O Information for year-end goodwill impairment testing is as follows: Reporting Reporting Unit #1 Unit #2 Fair value Book value before year-end adjustments for identifiable intangible amortization and impairment charges $10,500 7,000 $47,600 49,000 $36,400 For consolidation eliminating entry (O), what amount will be reported as expense for identifiable intangibles…
A copy machine costs $41,000 when new and has accumulated depreciation of $35,000. Suppose Hilton Copy Center discards this machine and receives nothing. What is the result of the disposal transaction? A. No gain or loss B. Gain of $6,000 C. Loss of $40,000 D. Loss of $6,000
A copy machine cost $33,000 when new and has accumulated depreciation of $30,000. Suppose ABC Printing discards this machine and receives nothing. What is the result of the disposal transaction? OA. No gain or loss OB. Loss of $3,000 OC. Loss of $33,000 O D. Gain of $3,000
Several years ago, a company acquired an asset at a cost of $400,000. Last year, the company recognized an impairment loss of $25,000 and properly reduced the asset's book value from $250,000 to $225,000. Using the asset's new base of $225,000, the company calculates depreciation for the current year to be $10,000, bringing the book value down to $215,000. However, the company has also determined that the asset's fair value has recovered and is now estimated to be $260,000. How should the company measure the asset on its current balance sheet? O The company should reverse the prior impairment and measure the asset at its fair value prior to the initial impairment of $250,000. O The company should not reverse the impairment and should depreciate the asset by $10,000 to a new book value of $215,000. The company should not reverse the impairment and should not depreciate the asset further, leaving the book value at $225,000. O The company should reverse the prior impairment and measure…
Shine Ltd estimated an impairment loss of $10,000 against its single cash-generating unit. The company had the following assets: headquarters building $129573; plant $81501; goodwill $14190. The net carrying amount of the plant after allocation of the impairment loss is: A. 81501 B. 3618 C. 3861 D. None of these
Sandyhorse Corp. has $370 million of debt outstanding at an interest rate of 14 percent. What is the present value of the interest tax shield if the debt has no maturity and if Sandyhorse is subject to a 30 percent marginal tax rate? $_________

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