1. Business
  2. Finance
  3. q group moon ltd has identified its non current assets...

Question: q group moon ltd has identified its non current assets...

Question details

Q/ Group Moon Ltd has identified its non current assets consist of three classes: goodwill, land and plant. Details of items included in each class appear below.

Goodwill

Total goodwill is $580,000 and no impairments have previously been recorded.

$300,000 of this total relates to the purchase of Company F on 1 February 2020. The estimated fair value of this goodwill at 30 June 2021 is $350,000.

The remaining $280,000 of the total goodwill relates to the purchase of Company G on 1 January 2021. The estimated recoverable amount of this goodwill at 30 June 2021 is $250,000.

Land

Land was acquired on 1 June 2016 for $2,100,000. The estimated market value of the land at 30 June 2021 is $2,600,000. However, if the land was sold, disposal costs of $90,000 would be incurred.

Plant

Plant was originally acquired for $270,000 on 1 September 2017. When purchased, the plant was considered to have a nil residual value and a 10 year useful life for both accounting and tax purposes.

The estimated market value of the plant at 30 June 2021 is $250,000.

 

Group MoonLtd's policy to date has been to apply the cost model and depreciate assets on a straight line basis.

A change of policy has been proposed, to commence on 30 June 2021, whereby the revaluation model would be adopted. However, there has been no proposed change to the method of depreciation, useful lives of assets or residual values.

The applicable tax rate is 30%.

 

Required:

1. Prepare journal entries for any necessary revaluations at 30 June 2021.

2. Prepare necessary journal entries associated with the three classes of assets for the year ending 30 June 2023.

 

Note: round all values to the nearest whole dollar - remember to show all supporting working papers and justify all calculations within these working papers with reference to the appropriate paragraphs of the relevant Accounting Standards.

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution