Question 1 (pls answer part B with working out) Mam Ltd acquired Bo Ltd on...
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Question 1 (pls answer part B with working out)
Mam Ltd acquired Bo Ltd on 1 July 2022 for $7 000 000 in cash. At that date, Bo Ltds net identifiable assets had a fair value of $5 800 000. The fair value of the net identifiable assets of Bo Ltd are determined as follows:
($000) Customer list 50 Machinery 1 450 Buildings 1 500 Land 3 000 6 000 Less: Bank loan 200 Net assets 5 800
At the end of the reporting period of 30 June 2023, the management of Mam Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be Bo Ltd, totals $6 200 000. The carrying amount of the net identifiable assets of Bo Ltd, which excludes goodwill, has not changed since acquisition and is $5 800 000. REQUIRED
a) Prepare the journal entry to account for any impairment of goodwill. b) Assume instead that at the end of the reporting period the management of Mam Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be Mam Ltd, totals $4 800 000. Prepare the journal entry to account for the impairment.
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