Parent acquires an 80% ownership interest in Subsidiary for 2,100 on 1st April, 20X1. At that date, Subsidiary's net identifiable assets have a fair value of 1,500. Parent chooses to measure the non-controlling interests as the proportionate interest of Subsidiary's net identifiable assets. The assets of Subsidiary together are the smallest group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Since other cash-generating units of Parent are expected to benefit from the synergies of the combination, the goodwill of 500 related to those synergies has been allocated to other cash-generating units within Parent. On 31st March, 20X2, Parent determines that the recoverable amount of cash-generating unit Subsidiary is 1,000. The carrying amount of the net assets of Subsidiary, excluding goodwill, is 1,350. Allocate the impairment loss on 31st March, 20X2.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Parent acquires an 80% ownership interest in Subsidiary for 2,100 on 1st April, 20X1. At
that date, Subsidiary's net identifiable assets have a fair value of 1,500. Parent chooses
to measure the non-controlling interests as the proportionate interest of Subsidiary's net
identifiable assets. The assets of Subsidiary together are the smallest group of assets that
generate cash inflows that are largely independent of the cash inflows from other assets or
groups of assets. Since other cash-generating units of Parent are expected to benefit from
the synergies of the combination, the goodwill of 500 related to those synergies has been
allocated to other cash-generating units within Parent. On 31st March, 20X2, Parent
determines that the recoverable amount of cash-generating unit Subsidiary is 1,000. The
carrying amount of the net assets of Subsidiary, excluding goodwill, is 1,350.
Allocate the impairment loss on 31st March, 20X2.
Transcribed Image Text:Parent acquires an 80% ownership interest in Subsidiary for 2,100 on 1st April, 20X1. At that date, Subsidiary's net identifiable assets have a fair value of 1,500. Parent chooses to measure the non-controlling interests as the proportionate interest of Subsidiary's net identifiable assets. The assets of Subsidiary together are the smallest group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Since other cash-generating units of Parent are expected to benefit from the synergies of the combination, the goodwill of 500 related to those synergies has been allocated to other cash-generating units within Parent. On 31st March, 20X2, Parent determines that the recoverable amount of cash-generating unit Subsidiary is 1,000. The carrying amount of the net assets of Subsidiary, excluding goodwill, is 1,350. Allocate the impairment loss on 31st March, 20X2.
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