Cherry Company Question:• HOW MUCH IS THE DEPRECIATION EXPENSE ON 2020?Question for Visayas Company:• Compute the Impairment Loss of CGU• Compute the Carrying amount of Machinery, AR, Patent and Goodwill after the Impairment Visayas Company has a number of cash generating units,including one whose major operation is the manufacture offine china.The assets of the fine china division at carrying amount atthe current year-end are:MachineryAccounts receivablePatentGoodwill5,000,0003,000,0001,000,0001,000,000The management of tested the cash generating unit forimpairment. It is reliably determined that the value in useof the cash generating unit is P7,200,000. Cherry Company acquired a building on January 1, 2017 at acost of P20,000,000. The building has an estimated useful life of6 years and residual value of P2,000,000.e ofThe building was revalued on January 1, 2020 and therevaluation revealed replacement cost of P30,000,000, residualvalue of P4,000,000 and revised useful life of 8 years.000000000

1. Visayas Company: Impairment loss of CGU= (5000000+3000000+1000000+1000000)-7,200,000 = 2800000…

HOW MUCH IS THE DEPRECIATION EXPENSE ON 2020? Question for Visayas Company: • Compute the Impairment Loss of CGU • Compute the Carrying amount of Machinery, AR, Patent and Goodwill after the Impairment

HOW MUCH IS THE DEPRECIATION EXPENSE ON 2020? Question for Visayas Company: • Compute the Impairment Loss of CGU • Compute the Carrying amount of Machinery, AR, Patent and Goodwill after the Impairment

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Cherry Company Question: • HOW MUCH IS THE DEPRECIATION EXPENSE ON 2020? Question for Visayas Company: • Compute the Impairment Loss of CGU • Compute the Carrying amount of Machinery, AR, Patent and Goodwill after the Impairment

Visayas Company has a number of cash generating units,
including one whose major operation is the manufacture of
fine china.
The assets of the fine china division at carrying amount at
the current year-end are:
Machinery
Accounts receivable
Patent
Goodwill
5,000,000
3,000,000
1,000,000
1,000,000
The management of tested the cash generating unit for
impairment. It is reliably determined that the value in use
of the cash generating unit is P7,200,000.

Cherry Company acquired a building on January 1, 2017 at a
cost of P20,000,000. The building has an estimated useful life of
6 years and residual value of P2,000,000.
e of
The building was revalued on January 1, 2020 and the
revaluation revealed replacement cost of P30,000,000, residual
value of P4,000,000 and revised useful life of 8 years.
000
000
000

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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