the newly created accounting treatment called the “acquisition method.” It will replace of the current “purchase method” strategy effective January 1‚ 2011. The major changes in the acquisition method involve variations to fair value measurement‚ goodwill recognition‚ and non-controlling interests. Purchase method The purchase method was recommended for all business combinations as per Section 1581 of the CICA Handbook in July 2001. Under this method‚ the parent company reported the net
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Exercises and Problems –W2 E9-1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011. 1. Paid $5‚000 of accrued taxes at time plant site was acquired. 2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. 3. Paid $850 sales taxes on new delivery truck. 4. Paid $17‚500 for parking lots and driveways on new plant site. 5. Paid $250 to have company name and advertising slogan
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CHAPTER 3 CONSOLIDATIONS—SUBSEQUENT TO THE DATE OF ACQUISITION Answers to Discussion Questions How Does a Company Really Decide which Investment Method to Apply? Students can come up with literally dozens of factors that should be considered by Pilgrim in making the decision as to the method of accounting for its subsidiary‚ Crestwood Corporation. The following is simply a partial list of possible points to consider. Use of the information. If Pilgrim does not monitor its own income levels
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Q1 Shiplake is preparing its financial statements to 31 March 2012. The following situation has been identified by an impairment team. Shiplake has an item of earth-moving plant‚ which is hired out to companies on short-term contracts. Its carrying amount‚ based on cost model‚ is $400‚000. The estimated fair value of this asset is only $250‚000‚ with associated costs of disposal of $5‚000. A recent review of its value in use based on its forecast future cash flows was estimated at $500‚000. Since
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AYB200/Weekly Tutorial Solutions/Week 5 S1‚ 2013 Assets 2 (Intangible Assets) Based on Week 4 Due Week 5 (due 25th March) NOTE: Provide references for your answers and quote where you have written something that is word-for-word from a source Textbook Questions (15 marks): Challenging Question 29 (5 marks) Applicability of AASB 138: A taxi licence would be considered to be an intangible asset and must be accounted for in accordance with AASB 138. Intangible assets can be carried at
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impairment test. Therefore‚ companies have to be required to test goodwill and other intangible assets‚ such as goodwill‚ brand name‚ financial assets‚ and investments for potential impairment on an interim basis. We know goodwill is an important part of total value of company. If any company acquires any other company‚ goodwill would be a vital indictor to determine the acquisition value. Thus‚ impairment of intangible assets such as goodwill is extremely important for any accountant. Question 2: Which
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Advanced Financial Accounting (M) 2014 Assignment 1 Answer to Assignment 1 Question 1 First method is ‘immediate write- off’‚ which leads to consuming of shareholders’ equity and changeable of rate-of-return measures. With this method‚ goodwill will remain in the pre-regulation period. Second method is ‘systematic write- off’‚ which is regularly written off over a limited period. This method is also called amortization that is under AAS 18 and AASB 1013. The third method is ‘ad- hoc write-
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employee‚ there must be precise communication with clients regarding topics that include adjusting lowering cost of market inventory on valuation‚ capitalizing interest on building construction‚ recording gain or loss on asset disposal and adjusting goodwill for impairment. Market Inventory There are various ways to lower the market inventory on valuation. In some cases it is permissible to reduce the recorded value of inventory to the lower of its cost or market value‚ providing the goods are not
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The other major part of Eagle’s business that we must investigate for Eagle’s future is the impairment of cash generating unit (CGU) in Serbia to do this we must look at the goodwill and determine if it has been impaired under IFRS and U.S. GAAP. To do so we must compare the carrying amount of the unit‚ including the goodwill‚ with the recoverable amount of the unit. If the recoverable amount of the unit
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Part 1: Goodwill and Discontinued Operations a) Carrying value of goodwill 24 June 2012 The carrying value of goodwill in Woolworth’s consolidated financial statements was $3221.8 Million (M) at 24 June 2012. This figure is included within ‘intangible assets’ on the consolidated balance sheet and exact amount is disclosed in the Note 11 of Notes to consolidated financial statements (Woolworths 2012‚ p 126). b) Movements in carrying value of goodwill The carrying value of goodwill at the
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