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Prepare the journal entry to account for any impairment

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Reference no: EM132916629

Pete Limited acquired Samson Limited on 1 July 20X7 for cash of $3,500,000. At that date, Samson Limited's net identifiable assets had a fair value of $2,900,000.

The fair value of the net identifiable assets of Samson Limited are determined as follows:

Customer List $25,000
Machinery $725,000
Buildings $750,000
Land $1,500,000
$3,000,000
Less: Bank Loan $100,000
Net Assets $2,900,000

  • At the end of the reporting period of 30 June 20X8, the management of Pete Limited determines that the recoverable amount of the cash-generating unit, which is considered to be Samson Limited, totals $2,400,000. The carrying amount of the net identifiable assets of Samson Limited, which excludes goodwill, has not changed since acquisition and is $2,900,000.

Required:

Problem a) Prepare the journal entry to account for any impairment of goodwill.

Problem b) What is the difference between an unidentifiable intangible asset and an identifiable intangible asset?

Reference no: EM132916629

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