Gandaph Corporation purchased a division five years ago for $ 3 million. The division has been identified as a reporting unit that is cash-generating under IFRS. Management is reviewing the division for impairment of goodwill and has estimated the fair value of the reporting unit to be $ 3.28 million and the unit’s value in use to be $ 3.45 million. In addition, there would be $ 85,000 in direct costs should the company decide to sell. The carrying amounts of the division’s net assets, including the associated goodwill of $ 1,450,000, are listed below. Carrying Amount of Net Assets Including Goodwill Cash $ 300,000 Receivables 450,000 Inventory 1,050,000 Property, plant, and equipment (net) 1,200,000 Goodwill 1,450,000 Less: Accounts and notes payable (750,000) Net assets, at carrying amounts $ 3,700,000 Required: Determine if goodwill is impaired and provide the related journal entries, if any, under both ASPE and IFRS
Gandaph Corporation purchased a division five years ago for $ 3 million. The division has been identified as a reporting unit that is cash-generating under IFRS. Management is reviewing the division for impairment of
Carrying Amount of Net Assets Including Goodwill
Cash $ 300,000
Receivables 450,000
Inventory 1,050,000
Property, plant, and equipment (net) 1,200,000
Goodwill 1,450,000
Less: Accounts and notes payable (750,000)
Net assets, at carrying amounts $ 3,700,000
Required:
Determine if goodwill is impaired and provide the related
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