Kwik Ltd (Kwik) runs a unit in Ablekuma Metropolis that has suffered a massive drop in income due to failure in its technology on 1 January 2018. As a result, the following carrying amounts were recorded in the books immediately before the impairment test. GH¢million Goodwill 20 Technology 5 17 Equipment 10 Land 50 Buildings 30 Other net assets 40 The value in use of the unit is estimated at GH¢85 million, and Kwik has received an offer of GH¢75 million for the unit. The technology is worthless, following its complete failure. Other net assets include inventory, receivables and payables. It is considered that the carrying amount of other net assets is a reasonable representation of its net realizable value. Required: In accordance with IAS 36: impairment of assets, show the accounting treatment for the above transactions.

Kwik Ltd (Kwik) runs a unit in Ablekuma Metropolis that has suffered a massive drop in income due to failure in its technology on 1 January 2018. As a result, the following carrying amounts were recorded in the books immediately before the impairment test. GH¢million Goodwill 20 Technology 5 17 Equipment 10 Land 50 Buildings 30 Other net assets 40 The value in use of the unit is estimated at GH¢85 million, and Kwik has received an offer of GH¢75 million for the unit. The technology is worthless, following its complete failure. Other net assets include inventory, receivables and payables. It is considered that the carrying amount of other net assets is a reasonable representation of its net realizable value. Required: In accordance with IAS 36: impairment of assets, show the accounting treatment for the above transactions.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 28RQSC

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