Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please explain part 2. I dont really understand the concepts behind. Excalibur Ltd operates in the Swan Valley in Western Australia where it is involved
Please explain part 2. I dont really understand the concepts behind.
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 S120 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 entity's 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. Non-current assets Buildings Accumulated depreciation Land (at fair value 1/7/18) Plant and equipment Accumulated depreciation Goodwill Accumulated impairment Trademarks $ 850000 (194000) 128000 1 454 000 (750000) 60000 (44000) 80000 losses - wine labels Current assets Cash Receivables 7 000 9000 Required 1. Prepare the journal entries required on 30 June 2019 in relation to the measurement of the assets of Excalibur Ltd. 2. Assume that, as the result of the allocation of the impairment loss, the plant and equipment was written down to S640 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. (LO5)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started