Instructions Required 1. Using references to the relevant accounting standards e
ID: 2601138 • Letter: I
Question
Instructions Required 1. Using references to the relevant accounting standards explain the required or recommended accounting treatment of the following transactions or events a. A revenue generating unit comprising the following assets with a goodwill of $30,000 has been impaired by $50,000 Original Cost $300,000 $150,000 $50,000 Asset Accum Depr & Carrying Impairment $80,000 Buildings Machiner Motor vehicles $80,000 Goodwill amount $220,000 $100,000 $50,000 $20,000 $30,000 $10,000 $30,000 In your answer you should set out the steps that you have taken and make reference to the relevant section of the accounting standard (5 Marks) b. Briefly explain the rationale for your treatment of goodw in the above example Marks) (2Explanation / Answer
ANSWER:
PARTICULARS ORIGINAL COST ACCUMULATED DEPRECIATION CARRYING AMOUNT Buildings 300000 80000 220000 Machinery 150000 50000 100000 Motor vehicles 80000 30000 50000 Revenue generating unit has assets Goodwill 30000 impairment 50000 As per accounting standard 28 first adjust that too goodwill remaining impairment loss to other assets in the ratio of carrying amount so remaining impairment loss =50000-30000=20000 it is to be adjusted towards remaining assets in the ratio of carrying amount = 22:10:5 PARTICULARS CARRYING AMOUNT impairment Revised carrying amount Buildings 220000 11891.89189 208108.1081 Machinery 100000 5405.405405 94594.59459 Motor vehicles 50000 2702.702703 47297.2973