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Essay about Home Computer Case

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Case 04-3 : Home Computer, Inc. Kamontip Sakdivorapong ______________________________________________________________________________________________ Home computer, Inc. has 3 business segments: Computer manufacturing, printer manufacturing and retail store. (1) computer manufacturing: Home computer will discontinue its video monitor operations at Seattle plant and establish a replacement in Sacramento. Other component parts will continue to be manufactured at the Seattle facility. The company will scrap the equipment and “special interior building configuration assets” related to the video monitor operations. According from ASC 310-10-20 Glossary, Asset group refer as “An asset group is the unit of …show more content…

Asset Group | Carrying Amount (million) | Pro Rata | Allocation of impairment(Loss), million | Adjusted Carrying amount, million | Long lived asset : | | | | | Building | $15 | 65% | ($12.7) | $2.3 | Equipment | $ 8 | 35% | ($6.8) | $1.2 | Total | $23 | 100% | ($19.5) | $3.5 |

The present fair value of Building is $24 million, therefore the amount adjusted of the fair value would be $24-$2.3= $21.7 million.
Impairment Loss = Carrying amount of asset group- asset group Fair Value = $23- ($21.7) = $ 1.3 million

(2) printer Manufacturing Operations: Home Computer will discontinue its printer manufacturing operations at its Santa Clara facility and relocate to Sacramento, and the Santa Clara building is for sale. The disposal asset of printer manufacturing operations are building and equipment. Since Home Computer has signed a binding commitment with a third-party to sell the facility for $12 million subsequent to the move to the replacement facility, which would be in 10 months period. The building and equipment would be classified the asset “Held for Sale” because they met the criteria in ASC 360-10-45-9.

ASC 360-10-45-9 A long-lived asset (disposal group) to be sold shall be classified as held for sale in the period in which all of the

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