Reference no: EM132618963
Questions -
Q1. Kingbird Industries purchased all the following assets and liabilities of Protector Goods for $1,013,000 cash:
|
|
Book Value
|
Fair Value
|
|
Accounts Receivable
|
$128,000
|
$128,000
|
|
Inventory
|
89,000
|
97,000
|
|
Property, Plant & Equipment (net)
|
573,000
|
700,000
|
|
Land
|
144,000
|
164,000
|
|
Accounts Payable
|
88,000
|
88,000
|
|
Notes Payable
|
112,000
|
112,000
|
Prepare the appropriate journal entries for Kingbird Industries on acquisition.
Q2. On September 12, Martinez Company agreed to an exchange of assets with another company. Martinez gave up a machine with an original cost of $50,000. $31,000 in accumulated depreciation had been recorded on this machine over the course of Martinez's ownership. Martinez determined that the machine being given up had a fair value of $18,200. Martinez also paid $8,000 in cash. Assume that Martinez follows IFRS and that the transaction has commercial substance. Prepare the journal entry to record the asset exchange on Martinez's books.
Q3. Riverbed Corp., a small company that follows ASPE, owns machinery that cost $955,000 and has accumulated depreciation of $405,000. The undiscounted future net cash flows from the use of the asset are expected to be $527,000. The equipment's fair value is $445,000. Using the cost recovery impairment model, prepare the journal entry, if any, to record the impairment loss.