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Question 1
Rangers Ltd acquired the following assets and liabilities of Rovers Ltd.
Plant and Equipment
Internally generated brandname
Bank Loan
Accounts Payable
Book Value
150,000
-----50,000
30,000
Fair Value
170,000
30,000
Book Value
200,000
N.A.
Fair Value
60,000
Required
a
b
c
Question 2
Burger Queen is a chain of fast-food restaurants. The key claim to fame of the Burger
Queen restaurants is that their fried chips are extra crunchy. Also, to ensure that there is a
consistent standard of food and services across the country, the management of the chain
conducts spot checks on restaurants. Failure to provide the high standard expected by
Burger Queen management can mean that the franchise to a particular location can be
taken away from the franchisee. Burger Queen management is responsible for the
television advertising across the county as well as the marketing program, including the
special deals that may be available at any particular time.
Each restaurant is responsible for its own sales, cooking of food, training of staff, and
general matters such as cleanliness of the store. However, all material used in the making
of the burgers and other items old are provided at a given cost from the central
management, which can thereby control the quality and the price.
Required
Identify the cash-generating unit(s) in this scenario. Give reasons for your conclusion
Question 3
The following information relates to Lusi Limited on 31 December 2015
Asset
Inventory
Land
Vehicles
Patent
Goodwill
Total
Carrying Amount
400,000
1,000,000
300,000
200,000
100,000
2,000,000
Notes
Recorded at lower of cost and net realisable value
Depreciated at 10% per annum
Indefinite useful life
Question 4
Refer to Question 3
At 31 December 2016, value in use exceeds the carrying amount by $80,000
a
b