Montys Construction & Paving expanded its business by purchasing Alcott Maintenance, a division that provides...
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Accounting
Montys Construction & Paving expanded its business by purchasing Alcott Maintenance, a division that provides road maintenance services. The division was purchased three years ago for $3,346,000 and has been identified as a reporting unit. The net assets for the division including goodwill are as follows:
Cash
$271,000
Accounts Receivables
292,000
Inventory
788,000
Property, Plant & Equipment
1,015,000
Goodwill
1,345,000
Accounts Payable
(125,000
)
Unearned Revenue
(81,000
)
Net assets, at carrying amounts
$3,505,000
a) The fair value of the Alcott Maintenance Division reporting unit as a whole is estimated to be $3,717,000. Management determines that the units value in use is $3,807,000.
Prepare any appropriate journal entries for goodwill impairment assuming that Monty Construction & Paving is reporting under ASPE.
b) Prepare any appropriate journal entries for goodwill impairment assuming that Monty Construction & Paving is reporting under IFRS.
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