Dumond Onshore Drilling, Inc. (DOD), is an international company that provides contract services to the energy industry. In its 2015 Form 10 kit reports the following doo Impact-During 2015, in response 19 A continued deterioration of the fund the cul and gas industry, including the dramatic decline in oil prices within out pending plans and contract cancelatos by customers, welding regulaty the US. Gulf of Mexico, or GOM, We evaluated 25 of our dig tis within that or carrying amounts may not be recoverable See Note 1). Un couried, pood powerghied cash flow analysis as described in Note 1, we des that camo the consisting of two ultra-dewater, deep and mid-oues de kupigs, were impaired (collectively referred to as the 2015 Rugs). Wie estimated the fair value of 16 of the 2015 Impaired Rigsutburing a market proach, which and to estimate the value that would be received for eaching the principalmost wow market for that rig in an orderly transaction between market participants. Such times world on various inputs, including historical contracted sales prices for similar rigs in our feet During the year ended December 31, 2015, we Ocornued an impairment loss or 4 million and baserred 5142 million net book value of five of our non-working jadi-proses held for out Consolidated Balance Sheet at December 31, 2015. In addition, we soldiers with an es lehet book value of 55.2 million and recognized an ag ganon disposition of 3.5 million. See related to Property and equipment hiding quotes from rig brokers and/or indicative bids, where applicable. We estimated the fait mostly use for this rig would be to cold stack the rig and reintroduce into the market a Drilling and other property and equipment, pol drilling At Impairments D Inc The fair value of this rig was estimated based on a calculation of the rig's discounted further cash fires over its remaining economic life, which utilized significant observabile inputs, includ . but not limited to, assumptions related to estimated dayrute veme, rig utilization, estimated pipment upgrade and regulatory survey costs, as well as estimated proceeds that may be received ultimate disposition of the rig. Our fair value estimates are representative of Level 3 fair value measurements due to the significant level of estimation involved and the lack of transparency as to the impotried During the first, third and fourth quarter of 2015, we recognized impairment loss of 51885 mil I. $26 million and $499.4 million, respectively, for an aggregate impairment loss of $860.4 million for the year ended December 31, 2015 5. Drilling and Other Property and Equipment Cost and accumulated depreciation of drilling and other property and equipment are summatured is follows Deilings and equipment Construction work in progress Land and buildings Office equipment and other Cou Les accumulated depreciation December 31 2015 2014 In thousands $9.345.484 $10.555314 269.605 09.2016 64,775 66.99 20.591 9,751401 11,132.100 3.372557 (4187 S6376X14 Notes und 2 Long-Lived Assets CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) 2015 2014 2013 $2.843.584 76,831 2.920,421 1.572525 74.967 388,092 64,788 ment of cash flows? What are the implications of the loss for Cash from operating activi- Year Ended December 31, Revenues $2,360,184 $2.737.126 Contract drilling 59,209 77,545 Revenues related to reimbursable expenses 2,419,393 2,814.671 Total revenues Operating expenses: 1.227.864 1,523,623 Contract drilling, excluding depreciation 58,050 76,091 Reimbursable expenses 493,162 456,483 Depreciation 66,462 81,832 General and administrative Impairment of assets 860,441 109,462 Bad debt expense Restructuring and separation costs 9,778 Gain on disposition of assets (2.290) (5,382) (4.070) Total operating expenses 2.713,467 2.242.109 2.118.815 Operating (loss) income (294,074) 572,562 801,606 Required: 1. What factors prompted DOD's impairment review of its drilling equipment? 2. Prepare the aggregate journal entry that DOD made in 2015 to record the impairment? 3. Compute the percentage effect of the impairment loss on 2015 operating income and the 2014 ending balance of Drilling and other property and equipment, net. 4. How does the the impairment loss affect 2015 Cash from operating activities on the tale 22,513 ties in future years? Royal Dutch St