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

Larkspur Division

Net Assets

As of December 31, 2020

(in millions)

Cash $63

Accounts receivable 212

Property, plant, and equipment (net) 2,607

Goodwill 213

Less: Notes payable (2,602)

Net assets $493

The purpose of the Larkspur 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 $410 million. Management has also received an offer 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.

(a)

Prepare the journal entry to record the impairment at December 31, 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit

Loss on Impairment 158

Goodwill 158

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(b)

At December 31, 2021, it is estimated that the division's fair value increased to $349 million. Prepare the journal entry to record this increase in fair value. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit