Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 1.33P
a.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary
the amount, if any, that P should report as a
a.
Expert Solution
Answer to Problem 1.33P
Goodwill to be impaired is
Explanation of Solution
For A:
Thus, the value of goodwill impairment is
For B:
Thus, the value of goodwill impairment is
For C:
Thus, the value of goodwill impairment is
b.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
the amount of goodwill that P should report in its current financial statements.
b.
Expert Solution
Explanation of Solution
| Goodwill to be reported | ||||
| Reporting unit | ||||
| A | B | C | ||
| Carrying value of goodwill | | | | |
| Implied goodwill at year-end | | | | |
| Goodwill to be reported at year-end | | | | |
Total Goodwill at year-end:
Reporting Unit A:
Reporting Unit B:
Reporting Unit C:
Total Amount of Goodwill:
Computation of Goodwill:
| Reporting Unit A | ||
| Fair value of reporting unit | ||
| Fair value of identifiable assets | ||
| Fair value of accounts payable | ||
| Fair value of net assets | ||
| Implied goodwill at year end |
| Reporting Unit B | ||
| Fair value of reporting unit | ||
| Fair value of identifiable assets | ||
| Fair value of accounts payable | ||
| Fair value of net assets | ||
| Implied goodwill at year end |
| Reporting Unit C | ||
| Fair value of reporting unit | ||
| Fair value of identifiable assets | ||
| Fair value of accounts payable | ||
| Fair value of net assets | ||
| Implied goodwill at year end |
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Under IFRS, when an entity chooses the revaluation model as its accounting policy for measuring property, plant, and equipment, which of the following statements is correct?a. When an asset is revalued, the entire class of property, plant, and equipment (such as Land) to which that asset belongs must be revalued.b. When an asset is revalued, it is reported on the balance sheet at its current replacement cost.c. Revaluations of property, plant, and equipment must be made at least every three years.d. The revalued assets must be reported in a special section of the balance sheet separate from those assets measured using the cost model.
Which method of the matching principle is used when a company recognizes depreciation expense on the income statement?
Group of answer choices
A. Installment method
B. Systematic and rational allocation
C. Immediate recognition
D. Associating cause and effect
Statement 1: When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model.
All statements are true.
Only two of the statements are true.
Only three of the statements are true.
All statements are…
Chapter 1 Solutions
Advanced Financial Accounting
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.16QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.2CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.6CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Multiple-Choice Questions Involving Account...Ch. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Balances Reported Following Combination Palm...Ch. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Acquisition in Multiple Steps Peal Corporation...Ch. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Computation of Account Balances Saspro Division is...Ch. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
Knowledge Booster
Similar questions
- Statement 1: When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model. A. Only two of the statements are true. B. All statements are true. C. Only one of the statements is true. D. Only three…arrow_forward1. When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the a. original cost. b. fair value. c. carrying amount. d. recoverable amount.2. What could be a valid reason for transfers from investment property to property, plant and equipment? a. When there is a change in use b. based on the accountant's discretion c. When the entity adopts the fair value model d. when there is change in asset's life3. An entity has an investment property that is held for rental income. The entity uses the fair value model for reporting the investment property. Which of the following statement is true? a. changes in fair value are reported in profit or loss in the current period b. changes in fair value are reported as an extraordinary gain c. changes in fair value are reported in other comprehensive income for the period d. changes in fair value are…arrow_forwardThe first step in determining goodwill impairment involves comparing the * implied value of a reporting unit to its carrying amount (goodwill excluded). fair value of a reporting unit to its carrying amount (goodwill included). Assets fair value of a reporting unit to O its carrying amount (goodwill included). fair value of a reporting unit to its carrying amount (goodwill excluded). Page 5 of 6arrow_forward
- A donated fixed asset （from a governmental unit) for which the fair value has been determined should be recorded as a debit to Fixed Assets and a credit to: a. Contributed Capital b. Retained Earnings c. Deferred Income d. Other Incomearrow_forwardThe cost of intangible asset acquired in business combination is recognized by entity in its book at: a. Cost of acquisition date b. Either at cost or fair value at acquisition date c. Fair value at acquisition date d. Fair value at end of the reporting periodarrow_forward1. Exploration and evaluation assets are initially measured at a. cost. b. revalued amount. c. fair value. d. a or b 2. Exploration and evaluation assets are exploration and evaluation expenditures recognized as a. assets in accordance with the entity’s accounting policy. b. expenses in accordance with applicable PFRSs. c. assets in accordance with (a) above, subject to the limitations provided under PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. d. any of these Use the following information for the next two questions: In 20x1, OBSTREPEROUS NOISY Mining Corp. acquired the right to use 1,000 acres of land to mine for gold. The lease cost is ₱200,000,000, and the related exploration costs on the property amounted to ₱40,000,000. It is the policy of OBSTREPEROUS Mining Corp. to capitalize all costs of exploration and evaluation of mineral resources. Intangible development costs of drilling, tunnels, shafts, and wells incurred before opening the mine amounted to…arrow_forward
- How Goodwill is accounted for on financial statement. What is inter-company long-term construction contracts.arrow_forwardCosts associated with various intangibles of a company may either be expensed when incurred or capitalized and amortized. Such costs might be recorded in any of the following ways: a. charged to the Patent account and amortizedb. charged to the Franchise account and amortizedc. charged to other appropriate asset accounts and amortized or depreciatedd. charged to expense when incurred Required:Indicate how each of the following costs should be recorded by placing the appropriate letter (a through d) in the space provided. ____ 1. Initial fee to acquire a franchise. ____ 2. Design, construction, and testing of preproduction prototypes and models. ____ 3. Legal costs incurred in connection with a successful patent application. ____ 4. Laboratory research aimed at discovery of new knowledge. ____ 5. Cost of purchased equipment that will be used in a series of R&D projects over a ten-year period. ____ 6. Legal costs of the initial incorporation of a business. ____ 7. Cost of a long-term…arrow_forwardWhen nonmonetary assets are exchanged, a company records the cost of the nonmonetary asset acquired at:arrow_forward
- The meaning of goodwill in accounting is: Multiple Choice The amount by which a company's value exceeds the value of its individual assets and liabilities. Long term assets held as investment. The support of the board of directors for the operating decisions of management. The cost of developing, maintaining, or enhancing the value of a trademark. Rights granted to an entity to deliver a product or service under specified conditions.arrow_forward1. The following are the possible methods of measuring assets and liabilities other than historical cost: I) Current Cost, II) Realisable Value, III) Present Value IV) Replacement Cost. According to IASB’s Conceptual framework for financial reporting which of the measurement bases above can be used by an entity for measuring assets and liabilities shown in its statement of financial position. a. I and II only b. II and II only c. I, II and III only d. All four methodsarrow_forwardWhich of the following assets of an acquiree may not be included whencomputing for the goodwill arising from a business combination? A. Capitalized kitchen utensils and equipmentB. Intangible assets not previously recordedC. Research and development costs charged as expensesD. Goodwillarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub