GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
9th Edition
ISBN: 9781260089042
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 11, Problem 11.26E
Impairment; property, plant, and equipment
• LO11–8
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 | $6.5 million |
| Estimated undiscounted sum of future |
4.0 million |
| Fair value | 3.5 million |
Required:
1. Determine the amount of the impairment loss, if any.
2. Repeat requirement 1 assuming that the estimated undiscounted sum of future cash flows is $6.8 million and fair value is $5 million.
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Exercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8]
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
Accumulated depreciation
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
The fair value of the Arizona plant is estimated to be $12 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
instead of $15.4 million and (4) $20.5 million instead of $15.4 million.
Complete this question by entering your answers in the tabs below.
Req 1
$ 34.5 million.
$ 14.4 million
$ 15.4 million…
Exercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8]
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
Accumulated depreciation
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
The fair value of the Arizona plant is estimated to be $19.5 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) $19.5
million instead of $18.4 million and (4) $34.25 million instead of $18.4 million.
Complete this question by entering your answers in the tabs below.…
Required information
[The following information applies to the questions displayed below.]
Midwest Services, Inc., operates several restaurant chains throughout the Midwest. One restaurant chain has experienced
sharply declining profits. The company's management has decided to test the operational assets of the restaurants for
possible impairment. The relevant information for these assets is presented below.
Book value
$8.5 million
7.0 million
5.8 million
Estimated total future cash flows
Fair value
2. Determine the amount of the impairment loss, if any, assuming that the estimated total future cash flows are $9.9 million and the fair
value is $8.1 million. (Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
Impairment loss
million
Chapter 11 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
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