On 31 December 20X1, Tom purchased all the shares of Jerry for BD2,000,000. The net fair...

 

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On 31 December 20X1, Tom purchased all the shares of Jerry for BD2,000,000. The net fair value of the identifiable assets acquired and liabilities assumed of Jerry at that date was BD1,900,000. Jerry made a loss in the year ended 31 December 20X2 and at 31 December 20X2 the net assets of Jerry - based on fair values at 1 January 20X2 - were as follows: (BD) Property, plant and equipment 1,150,000 200,000 Development expenditure Trademark 150,000 Net current assets 250,000 1,750,000 An impairment review on 31 December 20X2 indicated that the recoverable amount of Jerry's assets at that date was $,500,000. Value in use could not be determined separately for the assets. Required: Calculate the impairment loss that would arise in the consolidated financial statements of Tom Group as a result of the impairment review of Jerry's at 31 December 2022. Show how the impairment loss would be allocated On 31 December 20X1, Tom purchased all the shares of Jerry for BD2,000,000. The net fair value of the identifiable assets acquired and liabilities assumed of Jerry at that date was BD1,900,000. Jerry made a loss in the year ended 31 December 20X2 and at 31 December 20X2 the net assets of Jerry - based on fair values at 1 January 20X2 - were as follows: (BD) Property, plant and equipment 1,150,000 200,000 Development expenditure Trademark 150,000 Net current assets 250,000 1,750,000 An impairment review on 31 December 20X2 indicated that the recoverable amount of Jerry's assets at that date was $,500,000. Value in use could not be determined separately for the assets. Required: Calculate the impairment loss that would arise in the consolidated financial statements of Tom Group as a result of the impairment review of Jerry's at 31 December 2022. Show how the impairment loss would be allocated

Answer rating: 100% (QA)

To calculate the impairment loss we need to compare the carrying amount of Jerrys assets to their re... View the full answer