Presented below is net asset information related to the Carlos Division of Santana, Inc.

                       Carlos Division
                          Net Assets
               As of December 31, 2020
                         (in millions)
Cash......................................................................$ 50
Accounts receivable.............................................200
Property, plant, and equipment (net).............2,600
Goodwill................................................................200
Less: Notes payable........................................(2,700)
Net assets...........................................................$ 350

The purpose of the Carlos Division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduced. Many other benefits would also occur. To date, management has not had much success and is deciding whether a write-down at this time is appropriate. Management estimated its future net cash flows from the project to be $400 million. Management has also received an off er to purchase the division for $335 million (deemed an appropriate fair value). All identifiable assets’ and liabilities’ book and fair value amounts are the same.

Instructions

a. Prepare the journal entry (if any) to record the impairment at December 31, 2020.

b. At December 31, 2021, it is estimated that the division’s fair value increased to $345 million. Prepare the journal entry (if any) to record this increase in fair value.