Kwik Ltd (Kwik) runs a unit in Ablekuma Metropolis that has suffered a massive drop in income due to failure in its technology on 1 January 2018. As a result, the following carrying amounts were recorded in the books immediately before the impairment test. GH¢million Goodwill 20 Technology 5 17 Equipment 10 Land 50 Buildings 30 Other net assets 40 The value in use of the unit is estimated at GH¢85 million, and Kwik has received an offer of GH¢75 million for the unit. The technology is worthless, following its complete failure. Other net assets include inventory, receivables and payables. It is considered that the carrying amount of other net assets is a reasonable representation of its net realizable value. Required: In accordance with IAS 36: impairment of assets, show the accounting treatment for the above transactions.
Kwik Ltd (Kwik) runs a unit in Ablekuma Metropolis that has suffered a massive drop in income due to failure in its technology on 1 January 2018. As a result, the following carrying amounts were recorded in the books immediately before the impairment test. GH¢million Goodwill 20 Technology 5 17 Equipment 10 Land 50 Buildings 30 Other net assets 40 The value in use of the unit is estimated at GH¢85 million, and Kwik has received an offer of GH¢75 million for the unit. The technology is worthless, following its complete failure. Other net assets include inventory, receivables and payables. It is considered that the carrying amount of other net assets is a reasonable representation of its net realizable value. Required: In accordance with IAS 36: impairment of assets, show the accounting treatment for the above transactions.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(e) Kwik Ltd (Kwik) runs a unit in Ablekuma Metropolis that has suffered a massive drop in income due to failure in its technology on 1 January 2018. As a result, the following carrying amounts were recorded in the books immediately before the impairment test.
GH¢million
Goodwill
20
Technology
5
17
Equipment
10
Land
50
Buildings
30
Other net assets
40
The value in use of the unit is estimated at GH¢85 million, and Kwik has received an offer of GH¢75 million for the unit. The technology is worthless, following its complete failure. Other net assets include inventory, receivables and payables. It is considered that the carrying amount of other net assets is a reasonable representation of its net realizable value. Required: In accordance with IAS 36: impairment of assets, show the accounting treatment for the above transactions.
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