Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

X' Ltd anticipated that its assets may be impaired in June 2020. Land is measured by 'X' Ltd at fair value. At 30 June 2020,

X' Ltd anticipated that its assets may be impaired in June 2020. Land is measured by 'X' Ltd at fair value. At 30 June 2020, the entity revalued the land to its fair value of $12 000. The land had previously been revalued upwards by $2 000. As a result of its impairment testing, 'X' Ltd calculated that the recoverable amount of the entity's assets was $145 600. The carrying amounts of the assets of 'X' Ltd prior to adjusting for the impairment test and the revaluation of the land were as follows.

Non-current assets

Buildings $340 000

Accumulated depreciation (77 600)

Land (at fair value 1/7/2019) 51 200

Plant and equipment 581 600

Accumulated depreciation (300 000)

Goodwill 24 000

Accumulated impairment losses (17 600)

Trademarks labels 32 000

Current assets

Cash 2 800

Receivables 3 600

Required:

a.Prepare the journal entries required on 30 June 2020 in relation to the measurement of the assets of 'X' Ltd.

b.Assume that, as the result of the allocation of the impairment loss, the plant and equipment was written down to $256 000. If the fair value less costs of disposal of the plant and equipment was determined to be $240 000, 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.

Reference: Loftus, J., Leo, K.J., Daniluc, S., Boys, N., Luke, B., Ang, H.N., & Byrnes, K. (2019), Financial Reporting, 3rd End, John Wiley & Sons, Milton, Queensland, Australia.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Jamie Pratt, Michael F Peters

11th Edition

1119745322, 978-1119745327

More Books

Students also viewed these Accounting questions