Assignment

Student Name: Student ID:

Question $1$

A division of a company has the following balances in its financial statements:

Goodwill $$900,000$

Plant $$800,000$

Property $$2,200,000$

Intangibles $$600,000$

Other net assets $$550,000$

Following a period of losses, the recoverable amount of the division is deemed to be $$4$ million. A recent valuation of the building showed that the building has a market value of $$2\mathrm{.}5$ million. The other net assets are at their recoverable amount. The company uses the cost model for valuing property, plant and equipment.

To the nearest thousand, what is the balance following the impairment review?

Carrying amount Impairment After impairment

Goodwill $$900,000$

Plant $$800,000$

Property $$2,200,000$

Intangibles $$600,000$

Other net assets $$550,000$

Total $5,050,000$

Impairment$=$ carrying amount$-$ recoverable amount

Remaining balance of impairment after goodwill$=$

Plant$=$

Intangibles$=$

Question $2$

Company A entered into a $2-$year lease of an administration building with the following lease payments, payable at the end of each year:

$ $50,000$ for the first year; $$

$ $90,000$ for the second year; and $$

The interest rate is $10\%.$

Required: prepare the journal entry for today and the first year of the lease.