Reference no: EM132614506
Question - Harry Corporation purchased a division five years ago for $ 3 million. The division has been identified as a reporting unit that is cash-generating. Management is reviewing the division for impairment of goodwill and has estimated the fair value of the reporting unit to be $ 3.2 million and the unit's value in use to be $ 3.3 million. In addition, there would be $ 75,000 in direct costs should the company decide to sell. The carrying amounts of the division's net assets, including the associated goodwill of $ 1,350,000, are listed below.
Carrying Amount of Net Assets Including Goodwill
Cash $300,000
Receivables 350,000
Inventory 1,050,000
Property, plant, and equipment (net) 1,200,000
Goodwill 1,350,000
Less: Accounts and notes payable (750,000)
Net assets, at carrying amounts $3,500,000
Instructions - Determine if goodwill is impaired and provide the related journal entries, if any, under both ASPE and IFRS.