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Information has been collected regarding Orange Company’s cash-generating unit that includes goodwill. At 31 December 20X5, the assets of the Orange Company’s cash-generating unit are shown as follows (in millions) on the company’s SFP:     Cost   Accumulated Depreciation   Net Book Value   Goodwill $ 1,360     $ 0       $ 1,360     Equipment   4,850       3,150         1,700     Building   7,320       2,330         4,990     Patent rights   1,290       320         970       $ 14,820     $ 5,800       $ 9,020            An impairment test indicates that the recoverable amount assigned to the assets of this CGU is $6,200 million. The assets are not separable—they must be operated or sold together as a group. Required: 1. Prepare an adjusting journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate percentage answers to the nearest whole number (i.e. 0.12 should be considered as 12%) and final answers to the nearest whole dollar amount. Enter the amounts in millions.)

Information has been collected regarding Orange Company’s cash-generating unit that includes goodwill. At 31 December 20X5, the assets of the Orange Company’s cash-generating unit are shown as follows (in millions) on the company’s SFP:     Cost   Accumulated Depreciation   Net Book Value   Goodwill $ 1,360     $ 0       $ 1,360     Equipment   4,850       3,150         1,700     Building   7,320       2,330         4,990     Patent rights   1,290       320         970       $ 14,820     $ 5,800       $ 9,020            An impairment test indicates that the recoverable amount assigned to the assets of this CGU is $6,200 million. The assets are not separable—they must be operated or sold together as a group. Required: 1. Prepare an adjusting journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate percentage answers to the nearest whole number (i.e. 0.12 should be considered as 12%) and final answers to the nearest whole dollar amount. Enter the amounts in millions.)

Century 21 Accounting Multicolumn Journal
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets
Section19.6: Buying Intangible Assets And Calculating Amortization Expense
Problem 1OYO
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Information has been collected regarding Orange Company’s cash-generating unit that includes goodwill. At 31 December 20X5, the assets of the Orange Company’s cash-generating unit are shown as follows (in millions) on the company’s SFP:
 

  Cost   Accumulated Depreciation   Net Book Value  
Goodwill $ 1,360     $ 0       $ 1,360    
Equipment   4,850       3,150         1,700    
Building   7,320       2,330         4,990    
Patent rights   1,290       320         970    
  $ 14,820     $ 5,800       $ 9,020    
 

    

An impairment test indicates that the recoverable amount assigned to the assets of this CGU is $6,200 million. The assets are not separable—they must be operated or sold together as a group.


Required:
1. Prepare an adjusting journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate percentage answers to the nearest whole number (i.e. 0.12 should be considered as 12%) and final answers to the nearest whole dollar amount. Enter the amounts in millions.)

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