Reference no: EM132470016

point 1: Van Ltd has three divisions, Dairy, Yogurt and Chocolate, which operate independently of each other to produce milk products. The company has a headquarters and a research center located in North, with the divisions located throughout Fiji. The research center interacts with all the divisions to assist in the improvement of the manufacturing process and the quality of the products manufactured by the entity.

point 2: There is not as yet any basis on which to determine how the work of the research center will be allocated to each of the three divisions, as this will depend on priorities of the company overall and issues that arise in each division. The company headquarters provides approximately equal services to each of the divisions, but an immaterial amount to the research center.

point 3: Neither the headquarters nor the research center generates cash inflows.

On 30 June 2018, the net assets of Van Ltd were as follows:

	Dab Division	Division Division	Yoghurt Chocolate	Head Office	Research Centre
Land	$ 440,000		$ 280,000  $ 160,000	$ 110,000	$ 67,000
Plant and equipment	840,000		620,000        540,000	80,000	45,000
Accumulated depreciation	(240,000)		(200,000)     (160,000)	(10,000)	(12,000)
Inventories	240,000		180,000        140,000	0	0
Accounts receivable	120.000		100 000   60 000	0	0
	1,400,000		980,000        740,000	180,000	100,000
Liabilities	120.000		100.000        100.000	0	0
Net Assets	1.280.000		880 000        640.000	180.000	100 000

Management of Van Ltd believes there are economic indicators to suggest that the company's assets may be impaired. Accordingly, they have had recoverable amount assessed for each of the divisions:

Dairy Division $ 1,550,000

Yogurt Division 1,000,000

Chocolate Division 750,000

Point 4: The land held by Dairy division was measured at fair value using the revaluation model because of the specialized nature of the land. At 30 June 2018, the fair value was $440,000. The land held by Yogurt division was measured at cost, and had a fair value less cost to sell of $270,264 at 30 June 2018.

Required:

Question 1 : Provide journal entries to account for the impairment of Van Ltd as at 30 June 2018. Show all relevant working where required.