Question
XYZ Ltd is an entity that specialises in the manufacture of leather footwear for women. The company reported the following assets in its statement of
XYZ Ltd is an entity that specialises in the manufacture of leather footwear for women. The company reported the following assets in its statement of financial position at 30 June 2020, the entire company would be considered as a single cash generating unit:
Cash $160 000
inventory 200 000
Factory Building 920 000
Accumulated depreciation factory (320 000)
Machinery 640 000
Accumulated depreciation machinery (340 000)
Brand 100 000
Goodwill 40 000
$1 400 000
Because of the competition from overseas as customers pursue a strategy of buying online rather than visit XYZ Ltds stores, XYZ Ltd assessed its impairment position at 30 June 2020. The indicators suggested that an impairment loss was probable. XYZ Ltd calculated a recoverable amount of its company of $1 260 000.
Required
Prepare the journal entry(ies) for any impairment loss occurring at 30 June 2020 (Show all your workings).
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