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Prepare appropriate journal entries for goodwill impairment

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Reference no: EM132615416

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

The fair value of the Alcott Maintenance Division reporting unit as a whole is estimated to be $3,717,000. Management determines that the unit's value in use is $3,807,000.

Question a) Prepare, if any, appropriate journal entries for goodwill impairment assuming that Monty Construction & Paving is reporting under ASPE.

Question b) Prepare, if any, appropriate journal entries for goodwill impairment assuming that Monty Construction & Paving is reporting under IFRS.

Reference no: EM132615416

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