Question 2 (Amounts are small for testing purposes) Pelican Corporation purchased a division five years ago...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 2 (Amounts are small for testing purposes) Pelican Corporation purchased a division five years ago for $ 3,000. 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 $3,200 and the unit's value in use to be $3,300. In addition, there would be $ 25 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 are listed below. Carrying Amount of Net Assets Including Goodwill Cash $ 300 450 1,050 1,200 1,350 Less: Accounts and notes payable _(750) Net assets, at carrying amounts/book value $3,600 Receivables Inventory Property, plant, and equipment (net) Goodwill Required: a. Determine if goodwill is impaired and provide the related journal entries, if any, under the rational entity model. Show calculations. b. Determine if goodwill is impaired and provide the related journal entries, if any, under the cost recovery model. Show calculations. Question 2 (Amounts are small for testing purposes) Pelican Corporation purchased a division five years ago for $ 3,000. 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 $3,200 and the unit's value in use to be $3,300. In addition, there would be $ 25 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 are listed below. Carrying Amount of Net Assets Including Goodwill Cash $ 300 450 1,050 1,200 1,350 Less: Accounts and notes payable _(750) Net assets, at carrying amounts/book value $3,600 Receivables Inventory Property, plant, and equipment (net) Goodwill Required: a. Determine if goodwill is impaired and provide the related journal entries, if any, under the rational entity model. Show calculations. b. Determine if goodwill is impaired and provide the related journal entries, if any, under the cost recovery model. Show calculations.
Expert Answer:
Answer rating: 100% (QA)
a The first step is to determine the carrying amount of the net assets This can be done by adding up the carrying amounts of the cash receivables inve... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The ketone 2-heptanone has been identified as contributing to the odor of a number of dairy products, including condensed milk and cheddar cheese. Describe a synthesis of 2 heptanone from acetylene...
-
Electronic funds transfer has been identified as a major method of transferring cash for most organizations. Required complete one of the following: a. Describe how electronic commerce and electronic...
-
High blood pressure has been identified as a risk factor for heart attacks and strokes. The National Health and Nutrition Survey reported that 12 out of 38 randomly selected US adults had high blood...
-
During one week, four production employees of Martinez Manufacturing Company worked the hours shown below. All these employees receive overtime pay at one and one-half times their regular hourly rate...
-
When might the statute of limitations be longer than the general statute you described in problem 11?
-
In 2015 Beta Corporation earned gross profits of $760,000. a. Suppose that it is financed by a combination of common stock and $1 million of debt. The interest rate on the debt is 10%, and the...
-
Confirm that the definition of the streamfunction given in the text satisfies the continuity equation. Use this in the N-S equation and derive the form for the \(E^{4}\) operator in spherical...
-
Where, if at all, should the following items be classified on a balance sheet? (a) Goods out on approval to customers. (b) Goods in transit that were recently purchased f.o.b. destination. (c) Land...
-
flower pot sitting on a table. Sign Convention: Force Diagram: Net Force Equation(s): , Subscript Definitions: A chandelier hanging from a chain. Sign Convention: Force Diagram: Net Force...
-
New Age Solar sells and installs solar panels for residential homes. The companys sales representatives contact and pay a personal visit to potential customers to present the benefits of installing...
-
The Ship Shape Shop routinely expenses any item that costs less than $1,500, no matter what that item's useful life may be. The Ship Shape Shop then deducts these items on its tax return. Which safe...
-
Before unveiling the new iPhone15, the pricing manager at Apple was considering how much to charge for the new version and also how much to charge for the iPhone14, which is now an older model but...
-
Slategrey and Co. is a retail business. It reported a gross profit of $1,042,500 for the current year. If 70% of the gross profit was operating expenses, calculate the operating income of Slategrey...
-
3. Five annual deposits in the amounts of $1200, $1000, $800, $600, and $400 are made into a fund that pays interest at a rate of 9% compounded annually. Determine the present value of these deposits.
-
a is inversely proportional to the square of b, and a 13 when b 4. What is the value of a when b = 6.5? Enter your answer as a decimal correct to three significant figures. Your answer Type here
-
Mark gets paid monthly and every month he pays his housing loan which is one- quarter of his monthly salary and his car loan which is one-sixth of his monthly salary. After making these payments he...
-
Cash Register Disbursement Schemes Discussion Cash register disbursement schemes can be a significant source of fraud for businesses, with employees using various tactics to steal money from the cash...
-
10m solution. If Ka(HA) = 10 then pOH of solution will be [Given : log4=0.6] (A) 6.7 (B) Greater than 6.7 & less than 7.0 (C) Greater 7.0 & less than 7.3 (D) Greater than 7.3
-
There are two other stereoisomeric tartaric acids. Write their Fischer projections, and specify the configuration at their stereogenic centers.
-
In Problem 5.16 (Section 5.13) we saw that acid-catalyzed dehydration of 2,2 dimethylcyclohexanol afforded 1,2-dimethylcyclohexene. To explain this product we must write a mechanism for the reaction...
-
A compound is a ketone of molecular formula C7H14O. Its 13C NMR spectrum is shown in Figure 17.19. What is the structure of the compound?
-
A running mountain lion can make a leap 10.0 m long, reaching a maximum height of 3.0 m. a. What is the speed of the mountain lion just as it leaves the ground? b. At what angle does it leave the...
-
Emily throws a soccer ball out of her dorm window to Allison, who is waiting below to catch it. If Emily throws the ball at an angle of 30 below horizontal with a speed of 12 m/s, how far from the...
-
In punting a football, the kicker tries to maximize both the distance of the kick and its hang timethe time that the ball is in the air. A kicker gets off a great punt with a hang time of 5.0 s that...
Study smarter with the SolutionInn App