The Thunderman Company operates several factories that manufacture board games. Near the end of the company’s 2018 year, a change in business climate due to a competitor’s innovative products indicated to management that the $170 million book value (original cost of $300 million less accumulated depreciation of $130 million) of the assets of one of Thundermans Factories may not be recoverable. Management is able to identify cash flows from this factory and estimates that future cash flows over the remaining useful l life of the factory will be $150 million. The fair value of the factory’s assets is not readily available but is estimated to be $135 million. 1- Recoverability 2- Measurement of Impairment loss 3- Record Impairment

The Thunderman Company operates several factories that manufacture board games. Near the end of the company’s 2018 year, a change in business climate due to a competitor’s innovative products indicated to management that the $170 million book value (original cost of $300 million less accumulated depreciation of $130 million) of the assets of one of Thundermans Factories may not be recoverable. Management is able to identify cash flows from this factory and estimates that future cash flows over the remaining useful l life of the factory will be $150 million. The fair value of the factory’s assets is not readily available but is estimated to be $135 million. 1- Recoverability 2- Measurement of Impairment loss 3- Record Impairment

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter25: Taxation Of International Transact Ions

Section: Chapter Questions

Problem 25P

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