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Q1. Gandaph Corporation purchased a division ve years ago for $ 3 million. The division has been identied as a reporting unit that is cash-generating
Q1. Gandaph Corporation purchased a division ve years ago for $ 3 million. The division has been identied as a reporting unit that is cash-generating under IFRS. Management is reviewing the division for impairment of goodwill and has estimated the fair value of the reporting unit to be 35 3.2 million and the unit's value in use to be $ 3.3 million. In addition, there would be $ 75,000 in direct costs should the company decide to sell. The carrying amounts of the division's net assets, including the associated goodwill of $ 1,350,000, are listed below. Carrying Amount of Net Assets Including Goodwill Cash 55 300,000 Receivables 450,000 Inventory 1,050,000 Property, plant, and equipment (net) 1,200,000 Goodwill 1,350,000 Less: Accounts and notes payable (750.0001 Net assets, at carrying amounts 5 3,600,000 Instructions Determine if goodwill is impaired and provide the related journal entries, if any, under both ASPE and IFRS. 6Marks
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