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Part B Recognition of asset impairments 10 Marks Hooper Retailing Ltd (Hooper) operates a high fashion store in the Sydney CBD. Unfortunately, trading conditions have been difficult as customers are increasingly shopping online and Hooper has experienced increasingly poor performance (1.e., there are indicators of impairment). Below is Hooper's balance sheet as at 30 June 2018. Liabilites Assets Bank Overdraft 300,000 Cash 10,000 Accounts Payable 500,000 Accounts Receivable 200,000 Inventory 700,000 Equity 510,000 Property Plant and 300,000 Equipment - Net Goodwill 100,000 1,310,000 1,310,000 Additional information Hooper is a single cash generating unit. Hooper has received an offer to purchase the company (all assets and liabilities) from Pocock Limited for $310,000 immediately before 30 June 2018. The accounts receivable relate to longstanding customers and it is expected that $195,000 will be recoverable. The inventory has a net realisable value of $650.000. Required 1. Prepare Journal entries to recognise the asset impairment required on 30 June 2018. Part B Solution 50,000 Impairment - Inventory Accum Impairment - Inventory 50,000 5,000 Impairment - Acc Rec Accum Impairment - Acc Rec 5.000 145,000 Accum Impairment - PPE Goodwill Accum Impairment - PPE 100,000 45,000 Required 2 Goodwill AR Accum Impairment - Inventory Accum Impairment - PPE Impairment Expense 0 0 0 40,000 40,000