Declarmen Corporation owns a factory in the United Kingdom. A change in business climate indicates that Declarmen should investigate for possible impairment. Below are date related to the factory’s assets ($ in millions): Book value $ 570 Undiscounted sum of future estimated cash flows 630 Present value of future cash flows 525 Fair value less cost to sell (determined by appraisal) 540 The amount of impairment loss that Declarmen should recognize according to International Financial Reporting Standards is:

Declarmen Corporation owns a factory in the United Kingdom. A change in business climate indicates that Declarmen should investigate for possible impairment. Below are date related to the factory’s assets ($ in millions): Book value $ 570 Undiscounted sum of future estimated cash flows 630 Present value of future cash flows 525 Fair value less cost to sell (determined by appraisal) 540 The amount of impairment loss that Declarmen should recognize according to International Financial Reporting Standards is:

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 10PA: Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth...

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Book value	$ 570
Undiscounted sum of future estimated cash flows	630
Present value of future cash flows	525
Fair value less cost to sell (determined by appraisal)	540

Similar questions

Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth $4,500,000. A. What is the amount of goodwill in this transaction? B. What is Buchanans journal entry to record the purchase of McLaren? C. What journal entry should Buchanan write when the company internally generates additional goodwill in the year following the purchase of McLaren?
Sanders Corporation operates a factory in Arizona. Due to a change in business climate, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost $ 243,000,000 Accumulated depreciation 122,000,000 Estimate of the total cash flows to be generated by selling the productsmanufactured at the Arizona factory, not discounted to present value 110,000,000 Present value of estimated future cash flows 94,000,000 Estimated fair value of the Arizona factory determined by appraisal 90,000,000 Required:1. Determine the amount of impairment loss, if any.2. If a loss is indicated, prepare the entry to record the loss.3. Repeat requirement 1, assuming that Sanders prepares its financial statements according to International Financial Reporting Standards (IFRS). Also assume that the estimated fair value of the factory approximates fair value less costs to sell.
A. XYZ Ltd has a system of depreciating its assets at a higher rate than required. The value of assets are much higher valued than its position as shown in the Balance sheet. What is the purpose achieved by XYZ Ltd in devaluing its Assets? State with reasons. B. As on 31st March, 2021 the company has receivables account of its exports in terms of US Dollars. The rate of US Dollar on 20th May, 2021 has reduced by 20%, causing a substantial loss to the company. What are the matters to be stated in this regard in the Annual Report for 2020-21 ?
Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth $4,530,000. A. What is the amount of goodwill in this transaction? $? B. What is Buchanan’s journal entry to record the purchase of McLaren? If no entry is required, select "No entry required" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. $? $? $? $? $? $? C. What journal entry should Buchanan write when the company internally generates additional goodwill in the year following the purchase of McLaren? If no entry is required, select "No entry required" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank.
The following cases relate to the valuation of assets. Consider each case independently.a. World-Wide Travel Agency has office supplies costing $1,700 on hand at the balance sheet date. These supplies were purchased from a supplier that does not give cash refunds. World-Wide’s management believes that the company could sell these supplies for no more than $500 if it were to advertise them for sale. However, the company expects to use these supplies and topurchase more when they are gone. In its balance sheet, the supplies were presented at $500.b. Perez Corporation purchased land in 1957 for $20,000. In 2011, it purchased a similar parcelof land for $300,000. In its 2011 balance sheet, the company presented these two parcels ofland at a combined amount of $320,000. c. At December 30, 2011, Lenier, Inc., purchased a computer system from a mail-order sup-plier for $14,000. The retail value of the system—according to the mail-order supplier—was $20,000. On January 7, however, the system…
General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost $ 35.5million Accumulated depreciation $ 14.5million General’s estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value $ 15.6million The fair value of the Arizona plant is estimated to be $12.5 million. Required: 1. Determine the amount of impairment loss. 2. If a loss is indicated, prepare the entry to record the loss. 3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is (3) $13.5 million instead of $15.6 million and (4) $21.25 million instead of $15.6 million.
An analyst is studying the impairment of the manufacturing equipment of WLP Corp.,a U.K.-based corporation that follows IFRS. He gathers the following information aboutthe equipment:Fair value £16,800,000Costs to sell £800,000Value in use £14,500,000Net carrying amount £19,100,000Th e amount of the impairment loss on WLP Corp.’s income statement related to its manufacturing equipment is closest to:A. £2,300,000.B. £3,100,000.C. £4,600,000.
Chadwick Enterprises, Incorporated, operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company’s management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below at the end of 2024. Book value $ 7.1 million Estimated undiscounted sum of future cash flows 4.3 million Fair value 3.8 million Required: Determine the amount of the impairment loss, if any, reported in the 2024 income statement. Determine the reported book value of the assets in the year-end 2024 balance sheet. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $7.4 million and fair value is $5.3 million. Note: Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).
During the current accounting period, Jack Ltd considered the recognition of the following costs as intangible assets. GHS 40,000 spent on evaluating research findings GHS 60,000 spent on acquiring a brand name from a competitor GHS 50,000 spent on acquiring the legal rights to a production process, without which Jack Ltd’s business cannot function In accordance with IAS 38 Intangible Assets, what is the maximum amount that Jack Ltd could recognize as intangible assets?
Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company’s management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below. Book value $ 10.1 million Estimated undiscounted sum of future cash flows 5.8 million Fair value 5.3 million Required:1. Determine the amount of the impairment loss.2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $10.4 million and fair value is $6.8 million.
Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below. Book Value $8.1 million Estimated undiscounted sum of future cash flows 4.1 million Fair Value 4.3 million Required: 1. Determine the amount of the impairment loss. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.4 million and fair value is $5.8 million. (Negative amounts should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal…
Splish Brothers Inc. owns equipment that cost $627,000 and has accumulated depreciation of $162,000. The expected future net cash flows from the use of the asset are expected to be $414,000. The fair value of the equipment is $358,000.Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount