Required (a) Under ASPE, is goodwill impaired? If so, provided the necessary journal entries in good form. (b) Under IFRS, is goodwill impaired? If so, provided the necessary journal entries in good form.
Kenora Limited is a manufacturer of baby food. In 2015, the company acquired a pet food
manufacturing division at a cost of $500,000. As of December 31, 2021 (the fiscal year-end of Kenora
Limited), the pet food division has a fair value of $600,000 and value-in-use of $650,000. It is estimated
that the costs to sell the pet food division would be $25,500. Kenora Limited has determined that the
pet food division is a cash generating unit per IFRS.
The breakdown of the pet food division’s carrying amount of net assets is as follows on December 31,
2021:
Cash: $20,000
Inventory: $200,000
Machinery (Net): $400,000
Accounts Payable: $60,000
Notes Payable: $75,000
Required
(a) Under ASPE, is goodwill impaired? If so, provided the necessary
form.
(b) Under IFRS, is goodwill impaired? If so, provided the necessary journal entries in good
form.
Step by step
Solved in 3 steps with 2 images
