Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 11, Problem 11.27E
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
Intermediate Accounting, 10 Ed
Ch. 11 - Prob. 11.1QCh. 11 - Depreciation is a process of cost allocation, not...Ch. 11 - Identify and define the three characteristics of...Ch. 11 - Discuss the factors that influence the estimation...Ch. 11 - What is meant by depreciable base? How is it...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - Why are time-based depreciation methods used more...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Briefly explain the differences and similarities...Ch. 11 - Prob. 11.12QCh. 11 - Prob. 11.13QCh. 11 - What are some of the simplifying conventions a...Ch. 11 - Explain the accounting treatment required when a...Ch. 11 - Explain the accounting treatment and disclosures...Ch. 11 - Explain the steps required to correct an error in...Ch. 11 - Prob. 11.18QCh. 11 - Prob. 11.19QCh. 11 - Prob. 11.20QCh. 11 - Prob. 11.21QCh. 11 - Briefly explain the differences between U.S. GAAP...Ch. 11 - Under U.S. GAAP, litigation costs to successfully...Ch. 11 - Cost allocation At the beginning of its fiscal...Ch. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.8BECh. 11 - Prob. 11.10BECh. 11 - Prob. 11.11BECh. 11 - Prob. 11.12BECh. 11 - Prob. 11.13BECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.18BECh. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - Prob. 11.20BECh. 11 - Prob. 11.21BECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Subsequent expenditures LO119 Demmert...Ch. 11 - Prob. 11.1ECh. 11 - Prob. 11.2ECh. 11 - Prob. 11.3ECh. 11 - Prob. 11.4ECh. 11 - Depreciation methods; solving for unknowns LO112...Ch. 11 - Prob. 11.10ECh. 11 - Prob. 11.12ECh. 11 - Prob. 11.13ECh. 11 - Prob. 11.15ECh. 11 - Prob. 11.16ECh. 11 - Prob. 11.26ECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - Prob. 11.30ECh. 11 - Prob. 11.31ECh. 11 - Prob. 11.32ECh. 11 - Prob. 11.33ECh. 11 - FASB codification research LO118 The FASB...Ch. 11 - Prob. 11.35ECh. 11 - Subsequent expenditures LO119 Belltone Company...Ch. 11 - Concept s; terminology LO111 through LO116, LO118...Ch. 11 - Depreciation methods; change in methods LO112,...Ch. 11 - Prob. 11.6PCh. 11 - Prob. 11.7PCh. 11 - Prob. 11.10PCh. 11 - Prob. 11.12PCh. 11 - Prob. 11.14PCh. 11 - Analysis Case 111 Depreciation, depletion, and...Ch. 11 - Communication Case 112 Depreciation LO111 At a...Ch. 11 - Judgment Case 113 Straight-line method; composite...Ch. 11 - Prob. 11.4DMPCh. 11 - Prob. 11.8DMPCh. 11 - Research Case 119 FASB codification; locate and...Ch. 11 - Prob. 11.11DMPCh. 11 - Real World Case 1115 Depreciation and depletion...Ch. 11 - Prob. 11.16DMPCh. 11 - Target Case LO112, LO118, LO119 Target...
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