You are a senior auditor and have been assigned to test the impairment calculationsof Machinery for Beetow AG, an industrial manufacturer based in Germany. Beetowmaintains a listing on the NY Stock Exchange in the U.S.The following information was taken from the fixed asset records of Beetow as ofDecember 31, 2022:Carrying valueSelling price€100,000€ 85,000Cost of disposalExpected future cash flows€ 3,000€ 75,000Present value of expected future cash flows € 63,000Required: Answer each of the following. Show your work.1. Using IAS 36, what is the amount, if any, of the Impairment Loss for 2022?2. Under U.S. GAAP, what is the amount, if any, of the Impairment Loss for 2022?(Assume that the present value of expected future cash flows also closelyapproximates fair value).3. In 2023, assume that the economy strengthens and the value of the assetrises significantly. Briefly discuss the impairment accounting implications regardingthis asset in 2023 under IFRS and US GAAP.

Under IAS 36, an impairment loss is recognized when the carrying amount of an asset exceeds its…

Answered: You are a senior auditor and have been…

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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The following previously unreported intangible assets were acquired by a U.S. company in a business combination. Their beginning-of- current-year book values and allocation to reporting units are listed below. Trade names Distribution network Goodwill Trade names Distribution network Reporting Unit #1 Reporting Unit #2 $14,000 Both identifiable intangibles have a 5-year remaining life. Information for year-end impairment testing is as follows: Sum of Expected Sum of Expected Future Undiscounted Future Discounted Cash Flows Cash Flows 70,000 Select one: O a. $7,700 O b. $5,040 C. $9,240 d. $7,000 $11,200 56,000 $12,600 8,400 O Information for year-end goodwill impairment testing is as follows: Reporting Reporting Unit #1 Unit #2 Fair value Book value before year-end adjustments for identifiable intangible amortization and impairment charges $10,500 7,000 $47,600 49,000 $36,400 For consolidation eliminating entry (O), what amount will be reported as expense for identifiable intangibles…
Presented below is net asset information related to the Shamrock Division of Santana, Inc. Shamrock Division Net Assets As of December 31, 2025 (in millions) Cash $67 Accounts receivable 200 Property, plant, and equipment (net) 2,611 Goodwill 217 Less: Notes payable Net assets (2,606) $489 The purpose of the Shamrock Division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduced. Many other benefits would also occur. To date, management has not had much success and is deciding whether a write-down at this time is appropriate. Management estimated its future net cash flows from the project to be $410 million. Management has also received an offer to purchase the division for $335 million (deemed an appropriate fair value). All identifiable assets' and liabilities' book and fair value amounts are the same. (a) Prepare the journal entry to record the impairment at December 31, 2025. (If no entry is required,…
Presented below is net asset information related to the Kingbird Division of Santana, Inc. Kingbird Division Net Assets As of December 31, 2020 (in millions) Cash $73 Accounts receivable 206 Property, plant, and equipment (net) 2,617 Goodwill 202 Less: Notes payable (2,612 ) Net assets $486 The purpose of the Kingbird Division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduced. Many other benefits would also occur. To date, management has not had much success and is deciding whether a write-down at this time is appropriate. Management estimated its future net cash flows from the project to be $445 million. Management has also received an offer to purchase the division for $335 million (deemed an appropriate fair value). All identifiable assets' and liabilities' book and fair value amounts are the same. (a) Your answer is partially correct. %23
Recording Asset Exchanges Minneapolis Inc. has equipment with an original cost of $84,000 and accumulated depreciation of $48,000. This equipment was traded in for new equipment with a list price of $96,000. The new machine can be purchased without a trade-in for $90,000 cash. The difference between the fair value of the new asset and the market value of the old asset will be paid in cash. Prepare the entry to record acquisition of the new machine under each of the following separate cases. a. The new machine is purchased for cash with no trade-in. b. The transaction has commercial substance. The old equipment is traded in, and $60,000 cash is paid. c. The same as in part b except that the transaction lacks commercial substance. a. Account Name Dr. Cr. Answer Answer Answer Answer Answer Answer b. Account Name Dr. Cr. Equipment (new) Answer Answer Accumulated Depreciation Answer Answer Answer Answer Answer Answer Answer Answer Equipment (old) Answer…
B. If Flint prepares financial statements in accordance with ASPE, what is the recoverable amount of the equipment at November 30, 2023? Recoverable amount $
In singapore pinku Ltd sold a machine in the year ended 30 September 2023 for $23,000. This machine was purchased for S$60,000 in the year ended 30 September 2021 and it was depreciated over 5 years though CA was claimed under S19(1) over 3 years. What is the balancing adjustment for the above sale? A. Balancing Charge of $3,000B. Balancing Charge of $13,000C. BalancingAllowanceof$3,000 D. Balancing Allowance of $13,000
Presented below is net asset information related to the Metlock Division of Horton, Inc. Cash Receivable Property, plant, and equipment (net) Goodwill METLOCK DIVISION NET ASSETS AS OF DECEMBER 31, 2025 (IN MILLIONS) Less: Notes payable Net assets (a) $50 151 2,063 160 (2,141) $283 The purpose of the Metlock division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduced. Many other benefits would also occur. To date, management has not had much success and is deciding whether a write-down at this time is appropriate. Management estimated its future net cash flows from the project to be $322 million. Management has also received an offer to sell the division for $281 million. The book values and fair values are equal for all identifiable assets and liabilities. Prepare the journal entry (if any) to record the impairment at December 31, 2025. (Enter amounts in millions. If no entry is required, select "No Entry"…
Recording Asset Exchanges Minneapolis Inc. has equipment with an original cost of $52,500 and accumulated depreciation of $30,000. This equipment was traded in for new equipment with a list price of $60,000. The new machine can be purchased without a trade-in for $56,250 cash. The difference between the fair value of the new asset and the market value of the old asset will be paid in cash. Prepare the entry to record acquisition of the new machine under each of the following separate cases. a. The new machine is purchased for cash with no trade-in. b. The transaction has commercial substance. The old equipment is traded in, and $37,500 cash is paid. c. The same as in part b except that the transaction lacks commercial substance. a. Account Name Dr. Cr. AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note…

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