Week 4 - Suggested solutions to homework questions Week 4...

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Case 8C 1 Inventory Write-Down: DR Inventory loss (expense) $30.6 M CR Inventory $30.6 M Intangible Write-Down: DR Loss on impairment – brand name $7.3M CR Allowance for impairment – brand name $7.3M 2 The company is a wine producer and the cost of inventory includes raw materials, labour and certain manufacturing overheads. Inventory is an asset and only becomes an expense (cost of goods sold) when the inventory is sold. The change of accounting policy is that some items previously included in the asset (capitalised interest and corporate overheads) are now immediately expenses. Problem 9.27 1. (i) $4,000; (ii) $3,050; (iii) $5,000; (iv) 0 2. (i) $60,000 – (2*4000) = $52,000; (ii) $36,600 – (2*3050) = $30,500; (iii) 35,000 – (2*5000) = $25,000; (iv) $90,000 (assuming Higgins Ltd did not impair any of its intangible assets). 3.
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This note was uploaded on 03/19/2012 for the course ACT 1511 taught by Professor Leon during the Three '12 term at University of New South Wales.

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Week 4 - Suggested solutions to homework questions Week 4...

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