Preview Work It is determined that the fair market value of the Dryer division is $1,250,000. The recorded amount for Dryer's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value of $150,000 above the carrying value. Instructions: (a) Compute the amount of goodwill recognized, if any, on May 31, 2004. (b) Determine the impairment loss, if any, to be recorded on December 31. 2004. (c) Assume that the fair value of the Dryer division is $1 100 000 instead of $1,250,000. Prepare the journal entry to record the impairment loss, if any on December 31, 2004,

Preview Work It is determined that the fair market value of the Dryer division is $1,250,000. The recorded amount for Dryer's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value of $150,000 above the carrying value. Instructions: (a) Compute the amount of goodwill recognized, if any, on May 31, 2004. (b) Determine the impairment loss, if any, to be recorded on December 31. 2004. (c) Assume that the fair value of the Dryer division is $1 100 000 instead of $1,250,000. Prepare the journal entry to record the impairment loss, if any on December 31, 2004,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Drabinski Ltd. decided on 1 July 20X3 to dispose of an asset group consisting of land, a building, and equipment. An active plan of disposal is being carried out, and sale is highly probable within the following year. The assets’ carrying values and estimated recoverable amounts at 1 July 20X3 are as follows: Cost Carrying Value Estimated Recoverable Amount Land $ 470,000 $ 470,000 $ 498,000 Building 3,400,000 1,640,000 970,000 Equipment 1,040,000 470,000 357,000 $ 4,910,000 $ 2,580,000 $ 1,825,000 On 31 December 20X3, the net recoverable amount of the group is reliably estimated to be $1,859,000. On 1 April 20X4, the asset group is sold for $1,919,000, net of costs to sell. Prepare journal entries that are appropriate to record the information above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Do not give answer in image
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