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 the million for 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 S250 000 Inventory Brand – 'Froggy $50 000 S150 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 the million for 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 S250 000 Inventory Brand – 'Froggy $50 000 S150 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
Section: Chapter Questions
Problem 1Q
Related questions
Question
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education