On 1 January 2012, Bad Ltd acquired all the assets and liabilit ies of Wolf Ltd. Wolf Ltd has several operating divisions, including one whose major industry is the manufacture of toy trains, particularly those of historical significance. The toy trains division is regarded as a CGU. In paying $2 million Wolf Ltd, Bad Ltd calculated that it had acquired goodwill of for the net assets of $240 000. The goodwill was allocated to each of the divisions, and the as sets and liabilities acquired measured at fair value at acquisition date. At 31 December 2014, the carrying amounts of the assets of th e toy train division were: Factory Inventory Brand – 'Froggy $50 000 $250 000 $150 000 Goodwill $50 000 Total 500 000 There is a declining interest in toy trains because of the aggres sive marketing of computer-based toys, so the management of Bad Ltd measured the value in use of the toy train division at 31 December 2014, determining it to be $423 000. Required: Prepare the journal entries to account for the impairment loss at 31 December 2014.
On 1 January 2012, Bad Ltd acquired all the assets and liabilit ies of Wolf Ltd. Wolf Ltd has several operating divisions, including one whose major industry is the manufacture of toy trains, particularly those of historical significance. The toy trains division is regarded as a CGU. In paying $2 million Wolf Ltd, Bad Ltd calculated that it had acquired goodwill of for the net assets of $240 000. The goodwill was allocated to each of the divisions, and the as sets and liabilities acquired measured at fair value at acquisition date. At 31 December 2014, the carrying amounts of the assets of th e toy train division were: Factory Inventory Brand – 'Froggy $50 000 $250 000 $150 000 Goodwill $50 000 Total 500 000 There is a declining interest in toy trains because of the aggres sive marketing of computer-based toys, so the management of Bad Ltd measured the value in use of the toy train division at 31 December 2014, determining it to be $423 000. Required: Prepare the journal entries to account for the impairment loss at 31 December 2014.
Chapter1: Financial Statements And Business Decisions
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![On 1 January 2012, Bad Ltd acquired all the assets and liabilit
ies of Wolf Ltd.
Wolf Ltd has several operating divisions, including one whose
major industry is the manufacture of toy trains, particularly
those of historical significance.
The toy trains division is regarded as a CGU. In paying $2
million
for
the
net
assets
of
Wolf Ltd, Bad Ltd calculated that it had acquired goodwill of
$240 000.
The goodwill was allocated to each of the divisions, and the as
acquired
sets
and
liabilities
measured
at
fair value at acquisition date.
At 31 December 2014, the carrying amounts of the assets of th
e toy train division were:
Factory
Inventory
Brand – 'Froggy' $50 000
$250 000
$150 000
Goodwill
$50 000
Total
500 000
There is a declining interest in toy trains because of the aggres
sive marketing of computer-based toys, so the management of
Bad Ltd measured the value in use of the toy train division at
31 December 2014, determining it to be $423 000.
Required:
Prepare the journal entries to account for the impairment loss
at 31 December 2014.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5b1f029f-f5d2-4357-b587-d55dd23f7d81%2F1a8013f7-a8ba-41c6-bff0-46e77eb667fd%2Fc342qv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On 1 January 2012, Bad Ltd acquired all the assets and liabilit
ies of Wolf Ltd.
Wolf Ltd has several operating divisions, including one whose
major industry is the manufacture of toy trains, particularly
those of historical significance.
The toy trains division is regarded as a CGU. In paying $2
million
for
the
net
assets
of
Wolf Ltd, Bad Ltd calculated that it had acquired goodwill of
$240 000.
The goodwill was allocated to each of the divisions, and the as
acquired
sets
and
liabilities
measured
at
fair value at acquisition date.
At 31 December 2014, the carrying amounts of the assets of th
e toy train division were:
Factory
Inventory
Brand – 'Froggy' $50 000
$250 000
$150 000
Goodwill
$50 000
Total
500 000
There is a declining interest in toy trains because of the aggres
sive marketing of computer-based toys, so the management of
Bad Ltd measured the value in use of the toy train division at
31 December 2014, determining it to be $423 000.
Required:
Prepare the journal entries to account for the impairment loss
at 31 December 2014.
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