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Prepare the journal entry to account for any impairment

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Reference no: EM133001527

Question - 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 -

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

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

Reference no: EM133001527

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