{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Topic11 Questions

# Topic11 Questions - AF3110 Intermediate Accounting 1...

This preview shows pages 1–3. Sign up to view the full content.

1 AF3110 Intermediate Accounting 1 2009/10 Semester 2 Topic 11 Question 1 (Chapter17 Q4) Calculate the impairment loss on each of the following separately identifiable assets: Asset A Asset B Asset C Asset D Carrying amount 1,800 2,500 1,600 1,900 Fair value less costs to sell 1,400 1,500 500 2,000 Value-in-use 1,100 1,900 (400) Not identifiable Question 2 (Chapter17 Q8) The accountant at a cigarette-making company believes the fair value less costs to sell of the company's factory and its fixtures may have fallen below its carrying amount in the balance sheet. The factory has 1,500 square metres of floor space and is fitted with specially designed and fitted workstations and conveyance devices. The accountant asks you to investigate. You collect the following information: Two empty factory buildings of about the same age as your company's factory were recently sold in the same industrial district as your company's factory. One was 2,000 square metres in size and sold for \$6m; the other was 1,200 square metres in size and sold for \$3.36m. The general demand for factory accommodation in the district is steady, but there is no demand for a cigarette-making business. The average sale price for factories of all types and ages throughout the whole metropolitan area was \$2,750 per square metre last year. The specialised fixtures and fittings could only be sold for scrap value of \$100,000, after deducting the cost of removing these items. The factory selling agent's fees, legal fees and stamp duty cost are estimated to be 5% of the sale price. Required: What figure would you recommend as the estimated fair value less costs to sell of the factory and its fixtures and fittings? Justify your answer. (Note: There is no one precisely right answer).

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
2 Question 3 (Chapter17 Q9) In determining the value-in-use of an asset, forecasts of future net cash flows over the useful life of that asset are to be estimated. Which of the following types of cash flows can legitimately be included in the forecasted net cash flows of an asset? Tick each correct item.
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}