Excalibur Ltd operates in the Swan Valley in Western Australia where it is involved in the growing of grapes and the production of wine. In June 2019, it anticipated that its assets may be impaired due to a glut on the market for grapes and an impending tax from the Australian government seeking to reduce binge drinking of alcohol by teenage Australians.

Land is measured by Excalibur Ltd at fair value. At 30 June 2019, the entity revalued the land to its fair value of $120 000. The land had previously been revalued upwards by $20 000.

As a result of its impairment testing, Excalibur Ltd calculated that the recoverable amount of the entitys assets was $1 456 000.

The carrying amounts of the assets of Excalibur Ltd prior to adjusting for the impairment test and the revaluation of the land were as follows.

(a) Prepare the journal entries required on 30 June 2019 in relation to the measurement of the assets of Excalibur Ltd.

(b) Assume that, as the result of the allocation of the impairment loss, the plant and equipment was written down to $640 000. If the fair value less costs of disposal of the plant and equipment was determined to be $600 000, outline the adjustments, if any, that would need to be made to the journal entries you prepared in part 1 of this question, and explain why adjustments are or are not required.

Non-current assets Buildings Accumulated depreciation Land (at fair value 1/7/18) Plant and equipment Accumulated depreciation Goodwil Accumulated impairment losses Trademarks -wine labels $ 850000 (194000) 128 000 1 454 000 (750000) 60000 (44 000) 80000 Current assets Cash Receivables 7 000 9000