Jhon Ltd anticipated that its assets may be impaired in June 2020. The land is measured by Jhon Ltd at fair value. On 30 June 2020, the entity revalued the land to its fair value of $13 000. The land had previously been revalued upwards by $2 000. As a result of its impairment testing, John Ltd calculated that the recoverable amount of the entity’s assets was $148 600. The carrying amounts of the assets of John Ltd prior to adjusting for the impairment test and the revaluation of the land was as follows.
Jhon Ltd anticipated that its assets may be impaired in June 2020. The land is measured by Jhon Ltd at fair value. On 30 June 2020, the entity revalued the land to its fair value of $13 000. The land had previously been revalued upwards by $2 000. As a result of its impairment testing, John Ltd calculated that the recoverable amount of the entity’s assets was $148 600. The carrying amounts of the assets of John Ltd prior to adjusting for the impairment test and the revaluation of the land was as follows.
Non-current assets
Buildings $340 000
Land (at fair value 1/7/2019) 51 200
Plant and equipment 581 600
Accumulated depreciation (300 000)
Accumulated impairment losses (17 600)
Trademarks — labels 32 000 Current assetsCash 5 800 Receivables 2 600
Required:
- Prepare the
journal entries required on 30 June 2020 in relation to the measurement of the assets of John Ltd. - Assume that, as the result of the allocation of the impairment loss, the plant and equipment was written down to $256 000. If the fair value less costs of disposal of the plant and equipment was determined to be $240 000, outline the adjustments, if any, that would need to be made to the journal entries you prepared in part 1 of this question, and explain why adjustments are or are not required..
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