Financial Accounting - Access
4th Edition
ISBN: 9781259958533
Author: SPICELAND
Publisher: MCG
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Chapter 7, Problem 7.20E
1.
To determine
The amount of impairment loss.
2.
To determine
The amount of impairment loss, if the future cash flows are $10 Million and the fair value is $8.2 Million.
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ABC has determined that one of its cash generating units (CGU) is impaired. The assets of the CGU at their book value are: Land – 4,000,000; Factory – 1,200,000; Machinery and Equipment – 1,800,000. The value in use of the cash generating unit is P5,500,000. The impairment loss allocated to Machinery and Equipment is? (do not round off the percentage, round off your final answer to the nearest peso)
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).
4. YOU CAN DO IT Corporation has equipment with a carrying value of 450,000 on December 31, 2021. The following information was available on December 31, 2021: · Expected net cash flows (undiscounted)- P420,000 · Expected net cash flows discounted at 7%- P400,000 · Fair value, using the assets with other assets- P415,000 · Fair value, assuming the assets are sold stand-alone- P428,000 What is the impairment loss that the Company must report in its 2021 income statement for this equipment?
CHOICES:
P30,000
P35,000
P22,000
P50,000
Chapter 7 Solutions
Financial Accounting - Access
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