Essay about ACCY 200 Chapter 9 solutions

1051 Words Jan 11th, 2014 5 Pages
QUESTION 9.2
NARRABRI LTD

The carrying amount of the assets of the Toy Train Division is $500 000. If the value in use is $423 000, then there is an impairment loss of $77 000.

The impairment loss is firstly used to write off the goodwill - $50 000. The balance of the loss - $27 000 – is allocated across the other assets, except for inventory assuming it is recorded at the lower of cost and net realisable value:

Carrying Proportion Allocation Net Carrying Amount of Loss Amount Factory 250 000 5/6 22 500 227 500 Brand 50 000 1/6 4 500 45 500 300 000 27 000

The journal entry to record the impairment loss is:

Impairment loss Dr 77 000 Goodwill Cr 50 000 Accumulated depreciation and impairment
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$300 000 less $272 000.

The goodwill of $8 000 is written off.

The remaining $20 000 impairment loss is allocated as follows:

Carrying Amount Allocation Net Amount Land 50 000 4 000 46 000 Plant 200 000 16 000 184 000 250 000 20 000 230 000

At 30 June 2009, the journal entries to record the impairment are:

Impairment loss Dr 28 000 Land Cr 4 000 Goodwill Cr 8 000 Accumulated depreciation & impairment losses – plant Cr 16 000

At 30 June 2010, in relation to the assets previously adjusted for impairment:

CA at 30/6/10 CA – if no impairment Difference Land 46 000 50 000 4 000 Plant 250 000 250 000 Accumulated depreciation & impairment losses (84 400) (75 000) 9 400 13 400
The $13 000 reversal is allocated as follows: CA at 30/6/10 Allocation Land 46 000 2 826 Plant 165 600 10 174 211 600 13 000

However, the plant can only be revalued

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