Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Iplease answer number 3. Thank you A company operates a manufacturing plant. Due to a significant decline in demand for the product manufactured at the
Iplease answer number 3. Thank you
A company operates a manufacturing plant. Due to a significant decline in demand for the product manufactured at the site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost Accumulated depreciation The company's estimate of the total cash flows to be generated by selling the products manufactured at its plant, not discounted to present value 32,500,000 14,200,000 15,000,000 The fair value of the plant is estimated to be $11,000,000. 1. Determine the amount of impairment loss. 2. If a loss is indicated, prepare the entry to record the loss. 3. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is (a) $12,000,000 instead of $15,000,000 and (b) $19,000,000 instead of $15,000,000. 1 Step 1: Compared BV to undiscounted future cash flow (since future cash flows don't meet or exceed the BV, we fail' the recoverability test Step 2: measure impairment loss: compare the FV to BV. Loss will be the amount that BV exceeds FV calculations: BV the FV to BV. I FV 11,000,000 Impairment loss value 7,300,000 2 To record impairment loss, if any dr. impairment loss dr. accumulated depreciation cr. Manufacturing plant 7,300,000 14,200,000 21,500,000 3Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started