A food manufacturing company, Goodies Ltd, develops, manufactures, and sells health food bars. Goodies are now considering entering the home health equipment market and wish to develop a new brand name to go with their new venture.

In August 2021, Goodies spends $20,000 conducting market research into the demand for health equipment and determining that this would be a viable market. In October, Goodies spends $30,000 on marketing consultants to develop a new brand name - ‘G-health’, which they believe will be a success in the market. In November 2021, Goodies spends a further $25,000 for a graphic designer to develop the logo for their new ‘G-Health’ brand. In December 2021, Goodies launches its new G-health home health equipment and spends $40,000 on an advertising campaign to promote it.

Required:

A.) Provide the appropriate journal entries for Goodies Ltd to account for the above costs.

B.) Provide an explanation of why these are the appropriate entries, referring to AASB 138 where appropriate (max. 150 words).

Question 5 – Impairment of Assets

Asmaco Ltd has determined that its manufacturing division is a cash-generating unit. The carrying amounts of the net assets for this division as at 30 June 2021 are as follows:

Cash	$14 000
Accounts Receivable	22 000
Inventory	56 000
Loan receivable	30 000
Goodwill	40 000
Equipment	180 000
Accumulated Depn- Equipment	(60 000)
Factory	240 000
Accumulated Depn- Factory	(60 000)
Land	200 000
Total	662 000
Accounts Payable	23 000
Net Assets	639 000

The land has an individual fair value fewer costs of disposal of $170,000 as of 30 June 2021.

It was determined on 30 June 2021 that the CGU’s fair value fewer costs of disposal were $556,000 and its value in use was $546,000.

Required:

A.) Provide the appropriate journal entry for Asmaco Ltd in relation to the impairment testing on 30 June 2021. Show calculations and workings. Round % figures to nearest whole percent in performing calculations. References to AASB 136 are not required.

On 30 June 2022, Asmaco Ltd, because of a reversal of the indicators leading to the impairment, assessed the recoverable amount of the cash-generating unit to be $48,000 more than the carrying amount of the unit. As a result, Asmaco Ltd recognized a reversal of the impairment loss.

As of 30 June 2021, prior to impairment, depreciation was charged on the Equipment at $30,000 p.a. and on the Factory at $20,000 p.a. After impairment, the new depreciation was revised to $28,000 p.a. for the Equipment and $25,000 p.a. for the Factory.

The land has an individual recoverable amount of $180,000 as of 30 June 2022.

Required:

B.) Provide the appropriate journal entry for Asmaco Ltd in relation to the impairment reversal on 30 June 2022. Show calculations and workings. Round % figures to the nearest whole percent in performing calculations. References to AASB 136 are not required

Answer rating: 100% (QA)

A The appropriate journal entries for Goodies Ltd to account for the above costs would be as follows In August 2021 when Goodies spends 20000 on market research for the health equipment market Debit M... View the full answer