Assignmentdetails:

Antony Company, a successful efforts company, has 100% of the working interest in a filed in Texas. The filed constitutes a cost centerandis also an asset group for purposes of testing for impairment. In 2019, the price of oil dropped significantly; therefore, Antony must test for impairment. The table below reflects Antony's latest expected cash flows and risk-free rates for the remainder of the life of the filed.

Year

Total Net Cash FlowsEstimate(Market)

(million $)

Probability

Assessment

Credit-Adjusted

Risk-Free Rate

2020

2021

2022

2023

2024

2025

$100.0

90.9

85.3

91.2

88.30

75.4

87.5

91.80

75.4

62.4

50.2

45.8

45.9

55.5

36.0

31.6

21.0

15.4

30%

60%

10%

50%

20%

30%

70%

20%

10%

55%

20%

25%

80%

10%

10%

60%

20%

20%

6.2%

6.9%

7.10%

6.7%

5.5%

6.1%

Required:

a. Assume that Antony's carrying value for the filed is $300 million. Determine whether Antony must book impairment and, if so, record the necessary journal entry.

b. Assume that Antony's carrying value for the field is $400 million. Determine whether Antony must book impairment and, if so, record the necessary journal entry.