Gandaph Corporation purchased a division five years ago for $ 3 million. The division has been identified
Question:
Gandaph Corporation purchased a division five years ago for $ 3 million. The division has been identified as a reporting unit that is cash-generating under IFRS. Management is reviewing the division for impairment of goodwill and has estimated the fair value of the reporting unit to be $ 3.2 million and the unit’s value in use to be $ 3.3 million. In addition, there would be $ 75,000 in direct costs should the company decide to sell. The carrying amounts of the division’s net assets, including the associated goodwill of $ 1,350,000, are listed below.
Carrying Amount of Net Assets Including Goodwill
Cash $ 300,000
Receivables 450,000
Inventory 1,050,000
Property, plant, and equipment (net) 1,200,000
Goodwill 1,350,000
Less: Accounts and notes payable (750,000)
Net assets, at carrying amounts $ 3,600,000
Determine if goodwill is impaired and provide the related journal entries, if any, under both ASPE and IFRS.
Expert Answer:
ASPE ASPE requires that goodwill to be impaired if carrying value including g... View the full answer
