Question

Riverbeds Construction & Paving expanded its business by purchasing Alcott Maintenance, a division that provides road maintenance services. The division was purchased three years ago for $3,286,000 and has been identified as a reporting unit. The net assets for the division including goodwill are as follows:

Cash		$234,000
Accounts Receivables		278,000
Inventory		782,000
Property, Plant & Equipment		1,037,000
Goodwill		1,330,000
Accounts Payable		(137,000	)
Unearned Revenue		(77,000	)
Net assets, at carrying amounts		$3,447,000

The fair value of the Alcott Maintenance Division reporting unit as a whole is estimated to be $3,167,000. Management determines that the unit’s value in use is $3,260,000.

Prepare any appropriate journal entries for goodwill impairment assuming that Riverbed Construction & Paving is reporting under ASPE.

Prepare any appropriate journal entries for goodwill impairment assuming that Riverbed Construction & Paving is reporting under IFRS.

Answer 1