Exercise 12-21 The following is net asset information for the Dhillon Division of Klaus Inc.: NET ASSETS as at December 31, 2020 (in millions) Fair Value Excluding Book Value Goodwill Cash $ 55 $ 55 Accounts receivable 225 225 Property, plant, and equipment (net) 2,616 2,812 Goodwill 211 Less: Notes payable (2,626) (2,626) Net assets $ 481 The purpose of the Dhillon Division (also identified as a reporting unit or cash-generating unit) is to develop a nuclear- powered aircraft. If successful, travelling delays that are associated with refuelling could be greatly reduced, and operational efficiency would increase significantly. To date, management has not had much success and is deciding whether a writedown is appropriate at this time. Management has prepared the following estimates for the reporting unit or cash-generating unit: 1. Undiscounted future net cash flows are approximately $410 million. 2. Future value in use is approximately $478 million 3. Sale of the unit would yield $357 million and selling costs would total $7 million. Under ASPE, determine if there is any impairment and prepare any necessary entry on December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter for the amounts. Enter amounts in millions.) Debit Credit Date Account Titles and Explanation Dec. 31, 2020 On December 31, 2021, it is estimated that the reporting unit's fair value has increased to $410 million. Under ASPE, prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Enter amounts in millions.) Date Account Titles and Explanation Debit Credit Dec 31, 2021 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Under IFRS, determine if there is any impairment and prepare any necessary entry on December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Enter amounts in millions.) Date Account Titles and Explanation Debit Credit Dec 31, 2020 On December 31, 2021, it is estimated that the cash-generating unit's fair value has increased to $410 million. Under IFRS, prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts. Enter amounts in millions.) Date Account Titles and Explanation Debit Credit to Dec 31, 2021 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT
