Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 3: Mam Ltd acquired Bo Ltd on 1 July 2022 for $7 000 000 in cash. At that date, Bo Ltd's net identifiable assets
Question 3: Mam Ltd acquired Bo Ltd on 1 July 2022 for $7 000 000 in cash. At that date, Bo Ltd's net identifiable assets had a fair value of $5 800 000. The fair value of the net identifiable assets of Bo Ltd are determined as follows: (5000) Customer list 50 Machinery 1 450 Buildings 1 500 3 000 6 000 Less: Bank loan Net assets 5 800 Land 200 At the end of the reporting period of 30 June 2023, the management of Mam Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be Bo Ltd, totals $6 200 000. The carrying amount of the net identifiable assets of Bo Ltd, which excludes goodwill, has not changed since acquisition and is $5 800 000. 1. Prepare the journal entry to account for any impairment of goodwill. 2. Assume instead that at the end of the reporting period the management of Mam Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be Mam Ltd, totals $4 800 000. Prepare the journal entry to account for the impairment
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