Question
On 1 July 2019, Marvel Ltd acquired all the assets and liabilities of Strange Ltd. Strange Ltd has several operating divisions, including a frozen pie
On 1 July 2019, Marvel Ltd acquired all the assets and liabilities of Strange Ltd. Strange Ltd has several operating divisions, including a frozen pie division that manufactures frozen pies for family dinners. The pie division is regarded as a separate cash-generating unit.
At 30 June 2020, the carrying amounts of the assets of the pie division were:
Factory | $300,000 |
Equipment | $100,000 |
Inventory | $250,000 |
Brand Moreish | $200,000 |
Goodwill | $90,000 |
There is a declining interest in Strange Ltds frozen pies due to a concern for the healthy eating, so the management of Marvel Ltd measured the recoverable amount of the pie division at 30 June 2020 determining it to be $790,000.
Inventory is measured at the lower of cost and net realisable value in accordance with AASB102 Inventories.
Required:
- Allocate the impairment loss to assets in the CGU as per AASB136 (Please round off to the nearest dollar).
- Prepare journal entries to record the allocation of the impairment loss at 30 June 2020. Descriptions/Narrations are NOT required.
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