Calculation of and Journal Entries for Impairment of Goodwill
Gandaph $\bold{\text{Carrying Amount of Net Assets Including Goodwill}}$

question 46

Essay

Calculation of and journal entries for impairment of goodwill
Gandaph Corporation purchased a division five years ago for $ 3 million. The division has been identified as a reporting unit that is cash-generating under IFRS. Management is reviewing the division for impairment of goodwill and has estimated the fair value of the reporting unit to be $ 3.2 million and the unit's value in use to be $ 3.3 million. In addition, there would be $ 75,000 in direct costs should the company decide to sell. The carrying amounts of the division's net assets, including the associated goodwill of $ 1,350,000, are listed below.
$\bold{\text{Carrying Amount of Net Assets Including Goodwill}}$
$$\begin{array} { l r } \text { Cash } & \$ 300,000 \\\text { Receivables } & 450,000 \\\text { Inventory } & 1,050,000 \\\text { Property, plant, and equipment (net) } & 1,200,000 \\\text { Goodwill } & 1,350,000 \\\text { Less: Accounts and notes payable } & ( 750,000 ) \\\text { Net assets, at carrying amounts } & \$ 3,600,000\end{array}$$
Instructions
Determine if goodwill is impaired and provide the related journal entries, if any, under both ASPE and IFRS.

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Definitions:

Hallucinogens

A class of psychoactive substances that induce perceptual and cognitive alterations, often resulting in visual or auditory hallucinations.

Sensory Experience

The perception and interpretation of information gathered through the senses, such as sight, hearing, smell, taste, and touch.

Perceptual Experience

The subjective interpretation and awareness of sensory information, which forms the basis for understanding the environment and making judgments about it.

Alcohol

Alcohol generally refers to ethanol, a psychoactive substance found in beverages like beer, wine, and spirits, known for its intoxicating effects.