Reference no: EM133031544

Question - X is a company that manage building in Z state. The information provided happened in 2020.

a. On January 1, 2020, X acquired a competitor, Y company, for 25 million. The process included a park valued at 5 million and a building valued at 16 million. X recorded goodwill of 6 million. Y becomes subsidiary of X.

b. X estimate the selvage value of the building as 6 million and the park as 2 million. Both useful life are 50 years. X uses double declining method to calculate the depreciation.

c. In late december 2020, X developed a new project, but it's so close to the building that was previously acquired this new project reduced the undiscounted cashflow of the building to 250,000 usd a year for the remaining 49 years. The value of the park increased. The fair value at the end of the year (December 31, 2020) of the building is 9 million and the park is 8 million while the entire Y as a subsidiary is estimated at 21 million.

Required -

1. Determine the book value of the building and the park on December 31st 2020

2. Determine the impairment loss, if any, for the building and park. Prepare the journal entry.

3. Determine goodwill impairment loss, if any, prepare the journal entry.