FINANCIAL ACCT LL W/ACCESS
4th Edition
ISBN: 9781260732948
Author: SPICELAND
Publisher: MCG
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Chapter 7, Problem 7.14BE
Determine the impairment loss (LO7–8)
Vegetarian Delights has been experiencing declining market conditions for its specialty foods division. Management decided to test the operational assets of the division for possible impairment. The test revealed the following: book value of division’s assets. $33.5 million, fair value of division’s assets. $30 million; sum of estimated future cash flows generated from the division’s assets, $38 million. What amount of impairment loss, if any, should Vegetarian Delights record?
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Collison and Ryder Company (C&R) has been experiencing declining market conditions for its sportswear division. Management decided to test the assets of the division for possible impairment. The test revealed the following: book value of division’s assets, $26.5 million; fair value of division’s assets, $21 million; sum of estimated future cash flows generated from the division’s assets, $28 million. What amount of impairment loss should C&R recognize?
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Impairment loss
million
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 $8.6 millionEstimated total future cash flows 7.1 million Fair value 5.9 millionRequired:1. Determine the amount of the impairment loss, if any.2. Repeat requirement 1 assuming that the estimated total future cash flows are $10 million and the fair value is $8.2 million.
Chapter 7 Solutions
FINANCIAL ACCT LL W/ACCESS
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Asset impairment explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=lWMDdtHF4ZU;License: Standard Youtube License