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On July 1, 2019, Spring Inc. (Spring) completed the acquisition of Season Inc. (Season) to create a modern media company built around premium content and

On July 1, 2019, Spring Inc. (Spring) completed the acquisition of Season Inc. (Season) to create a modern media company built around premium content and high-speed networks. The purchase price was $10 million and Season has been identified as a reporting, cash-generating unit. The Season division outperformed its industry cohort in 2019. However, due to recent challenges in the market, at December 31, 2020, there is concern that the divisions expected future earnings and cash flows were significantly decreased. Based on the managements review, the following information was obtained:

Further, the following information is available with respect to the carrying amount of Season divisions net assets.

Requirements

1) Assuming Spring follows IFRS,

a. Carry out the impairment test and determine the total impairment loss, if any. (5 marks)

b. Determine the allocation of the impairment loss, if any. (3 marks)

c. Prepare the related journal entries. (3 marks)

2) If Spring follows ASPE, determine if goodwill is impaired. If so, calculate the total impairment loss. If not, provide reasons. (2 marks)

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