Question
Jhon Ltd anticipated that its assets may be impaired in June 2020. The land is measured by Jhon Ltd at fair value . On 30
Jhon Ltd anticipated that its assets may be impaired in June 2020.
The land is measured by Jhon Ltd at fair value
. On 30 June 2020, the entity revalued the land to its fair value of $13 000.
The land had previously been revalued upwards by $2 000.
As a result of its impairment testing, John Ltd calculated that the recoverable amount of the entitys assets was $148 600.
The carrying amounts of the assets of John Ltd prior to adjusting for the impairment test and the revaluation of the land was as follows.
Non-current assets
Buildings $340 000
Accumulated depreciation (77 600)
Land (at fair value 1/7/2019) 51 200Plant and equipment 581 600
Accumulated depreciation (300 000)
Goodwill 24 000
Accumulated impairment losses (17 600)
Trademarks labels 32 000 Current assetsCash 5 800 Receivables 2 600
Required:
- Prepare the journal entries required on 30 June 2020 in relation to the measurement of the assets of John Ltd.
- Assume that, as the result of the allocation of the impairment loss, the plant and equipment was written down to $256 000. If the fair value less costs of disposal of the plant and equipment was determined to be $240 000, 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.
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