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School
Norwalk Community College *
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Course
113
Subject
Accounting
Date
Nov 24, 2024
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png
Pages
1
Uploaded by EarlFlagHare23
2
6
General
Optic
Corporation
operates
a
manufacturing
plant
in
Arizona.
Due
to
a
significant
decline
in
demand
for
the
product
manufactured
at
the
Arizona
site,
an
impairment
test
is
deemed
appropriate.
Management
has
acquired
the
following
information
for
the
assets
at
the
plant:
6
Cost
$
37.5
million
Accumulated
depreciation
$
14.7
million
General’s
estimate
of
the
total
cash
flows
to
be
generated
by
selling
the
products
$
16.0
million
manufactured
at
its
Arizona
plant,
not
discounted
to
present
value
.
points
The
fair
value
of
the
Arizona
plant
is
estimated
to
be
$13.5
million.
Required:
1.
Determine
the
amount
of
impairment
loss.
2.
If
a
loss
is
indicated,
prepare
the
entry
to
record
the
loss.
3.
&
4.
Determine
the
amount
of
impairment
loss
assuming
that
the
estimated
undiscounted
sum
of
future
cash
flows
is
(3)
$14.5
million
instead
of
$16
million
and
(4)
$23.5
million
instead
of
$16
million.
&
Answer
is
complete
and
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Req
2
Req
3
and
4
Determine
the
amount
of
impairment
loss.
Note:
Enter
your
answer
in
millions
rounded
to
1
decimal
place
(i.e.,
5,500,000
should
be
entered
as
5.5).
Impairmentloss
|
9.3
@
|
million
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Related Questions
4. During December 20x3, Bubba Inc. determined that there had
been a significant decrease in the value of its equipment used
in its manufacturing process. At December 31, 20x3, Bubba
compiled the information below.
Original cost of the equipment
Accumulated depreciation
Present value of expected net future cash inflows
500,000
300,000
related to the
continued use and eventual
disposal of the
equipment
Fair value less costs of disposal of the equipment
175,000
125,000
What is the amount of impairment loss that should be reported on
Bubba's income statement prepared for the year ended December
31, 20х3?
arrow_forward
Exercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8]
General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product
manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for
the assets at the plant:
Cost
Accumulated depreciation
General's estimate of the total cash flows to be generated by selling the products
manufactured at its Arizona plant, not discounted to present value
The fair value of the Arizona plant is estimated to be $12 million.
Required:
1. Determine the amount of impairment loss.
2. If a loss is indicated, prepare the entry to record the loss.
3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted
instead of $15.4 million and (4) $20.5 million instead of $15.4 million.
Complete this question by entering your answers in the tabs below.
Req 1
$ 34.5 million.
$ 14.4 million
$ 15.4 million…
arrow_forward
Exercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8]
General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product
manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for
the assets at the plant:
Cost
Accumulated depreciation
General's estimate of the total cash flows to be generated by selling the products
manufactured at its Arizona plant, not discounted to present value
The fair value of the Arizona plant is estimated to be $19.5 million.
Required:
1. Determine the amount of impairment loss.
2. If a loss is indicated, prepare the entry to record the loss.
3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is (3) $19.5
million instead of $18.4 million and (4) $34.25 million instead of $18.4 million.
Complete this question by entering your answers in the tabs below.…
arrow_forward
9. XYZ Company quarries limestone, crushes it, and sells it to be used in road building. XYZ paid P10,000,000 for a certain quarry. The property can be sold for P3,000,000 after production ceases. Estimated reserves 10,000,000; Tons quarried through December 31, 20X4 4,000,000; Tons quarried in 20X5 1,500,000. An engineering study performed in 20X5 indicated that as of January 1, 20X5, 7,500,000 tons of limestones were available. 30. Assume that the materials and labor cost incurred during 20X5 is 2,160,000 and that 1,000,000 tons were sold during the year at P5.00, Gross Profit for the year is?
arrow_forward
Sh7
arrow_forward
5
My work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion.
Required information
[The following information applies to the questions displayed below.]
Beacon Company is considering automating its production facility. The initial investment in automation would be $9.11
million, and the equipment has a useful life of 7 years with a residual value of $1,200,000. The company will use straight-
line depreciation. Beacon could expect a production increase of 44,000 units per year and a reduction of 20 percent in
the labor cost per unit.
Current (no
automation)
71,000 units
Proposed
(automation)
115,000 units
Per
Per
Production and sales volume
Unit
Total
Unit
Total
Sales revenue
$90
$ ?
$90
$ ?
Variable costs
Direct materials
$16
$ 16
Direct labor
15
?
Variable manufacturing overhead
9
9
Total variable manufacturing costs
Contribution margin
40
?
$50
Fixed manufacturing costs
Net operating income
?
$ 1,130,000
$ 53
?
$…
arrow_forward
:57
El Dorado Foods Incorporated owns a chain of specialty stores in the Pacific
Northwest. Recently, four of the stores have experienced declining profits due to
market saturation in the area. As a result, management gathered data about possible
impairment of the assets of the stores. The information gathered was as follows:
Book value: $17.5 million
Fair value: $14.9 million
Undiscounted sum of future cash flows: $16.5 million
Required:
Determine the amount, if any, of the impairment loss that El Dorado must recognize on
these assets.
Note: Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000
should be entered as 5.5).
Impairment loss
million
arrow_forward
4
02:59:09
Perez Company acquires an ore mine at a cost of $2,240,000. It incurs additional costs of $627,200 to access the mine, which is
estimated to hold 1,600,000 tons of ore. 210,000 tons of ore are mined and sold the first year. The estimated value of the land after the
ore is removed is $320,000. Calculate the depletion expense from the information given.
1. & 2. Prepare the entry to record the cost of the ore mine and year-end adjusting entry.
Complete this question by entering your answers in the tabs below.
eBook
Depletion
Expense
General
Journal
Calculate the depletion expense from the information given.
Note: Round "Depletion per unit" to 3 decimal places.
Cost
Salvage
Amount subject to depletion
Total units of capacity
Depletion per unit
Units extracted and sold in period
Depletion expense
Help
Save &
arrow_forward
Finsbury Co has a cash generating unit (CGU) that suffers a large
drop in income due to reduced demand for its products. An
impairment review was carried out and the recoverable amount of
the cash generating unit was determined at $100m. The assets of
the CGU had the following carrying amounts immediately prior to
the impairment:
$m
Goodwill
25
Intangibles
60
Property, plant and equipment
30
Inventory
15
Trade receivables
10
140
The inventory and receivables are considered to be included at their
recoverable amounts.
What is the carrying amount of the intangibles once the
impairment loss has been allocated?
A
$45m
В
$50m
C
$55m
D
$60m
arrow_forward
6
arrow_forward
Blake Corporation has determined that one of its machines has experienced an impairment in value. However, the company expects to continue to use the asset for another 3 full
years because no active market exists for this machine. Selected information on the impaired asset (on the date that impairment was determined to exist) is provided below.
Original cost of the machine $22,000 Carrying amount of the machine 20, 000 Undiscounted future cash flows expected to be generated by the machine 15,000 Fair value of the
machine (determined by calculating the present value of the future cash flows expected to be generated by the machine) 12,000 What is the amount of the impairment loss to be
recorded by Blake? $3,000 $5,000 $7,000 $8,000
arrow_forward
None
arrow_forward
4.
arrow_forward
Impairment
Basil Corporation's balance sheet includes the following asset:
Equipment: $100,000
Accumulated depreciation: 20,000
Basil was notified of a significant change in demand for the product produced by the machine, and decided to test for impairment. Basil obtained the following data:
Future cash flows (undiscounted): $78,000
Value in use (discounted): 73,000
Fair value: 75,000
Selling costs: 3,000
Required:
Assuming Basil Corporation follows ASPE, calculate if the asset is impaired, and prepare any journal entry required. Show your calculations.
arrow_forward
Can you tell me why this keeps saying that the answer is incomplete? I’ve already depreciated the asset down to its residual value.
arrow_forward
I don't need ai answer general accounting question
arrow_forward
I just need BE10.9
arrow_forward
A cash-generating unit comprises the following assets
$’000
Building
700
Plant & Equipment
200
Goodwill
90
Current Assets
1,010
1,010
One of the machines, carried at $40,000, is damaged and will have to be scrapped. The recoverable amount of the cash-generating unit is estimated at $750,00
What will be the carrying amount of the building when the impairment loss has been recognised? (to the nearest $'000)
Select one alternative
$577,000
$594,000
$548,000
$597,000
arrow_forward
N6
A new machine tool is being purchased for $260,000 and is expected to have a $36,000 salvage value at the end of its 5-year useful life. Assume any remaining depreciation is claimed in the last year. Compute the depreciation schedules for this capital asset, using the following methods: (a) Straight-line depreciation (b) MACRS Note: No statement is required for this problem.
arrow_forward
A cash-generating unit comprises the following assets:
£000
Goodwill
220
Land
1,280
Plant and equipment
400
1,900
One of the pieces of equipment, carried at £80,000, is damaged and will have to be scrapped. The recoverable amount of the cash-generating unit is estimated at £1,500,000.
What will be the carrying amount of the land after the impairment loss has been recognised?
Select one:
a.
£1,200,000
b.
£1,142,858
c.
£1,010,526
d.
£1,055,736
e.
£300,000
arrow_forward
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Related Questions
- 4. During December 20x3, Bubba Inc. determined that there had been a significant decrease in the value of its equipment used in its manufacturing process. At December 31, 20x3, Bubba compiled the information below. Original cost of the equipment Accumulated depreciation Present value of expected net future cash inflows 500,000 300,000 related to the continued use and eventual disposal of the equipment Fair value less costs of disposal of the equipment 175,000 125,000 What is the amount of impairment loss that should be reported on Bubba's income statement prepared for the year ended December 31, 20х3?arrow_forwardExercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8] General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost Accumulated depreciation General's estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value The fair value of the Arizona plant is estimated to be $12 million. Required: 1. Determine the amount of impairment loss. 2. If a loss is indicated, prepare the entry to record the loss. 3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted instead of $15.4 million and (4) $20.5 million instead of $15.4 million. Complete this question by entering your answers in the tabs below. Req 1 $ 34.5 million. $ 14.4 million $ 15.4 million…arrow_forwardExercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8] General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost Accumulated depreciation General's estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value The fair value of the Arizona plant is estimated to be $19.5 million. Required: 1. Determine the amount of impairment loss. 2. If a loss is indicated, prepare the entry to record the loss. 3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is (3) $19.5 million instead of $18.4 million and (4) $34.25 million instead of $18.4 million. Complete this question by entering your answers in the tabs below.…arrow_forward
- 9. XYZ Company quarries limestone, crushes it, and sells it to be used in road building. XYZ paid P10,000,000 for a certain quarry. The property can be sold for P3,000,000 after production ceases. Estimated reserves 10,000,000; Tons quarried through December 31, 20X4 4,000,000; Tons quarried in 20X5 1,500,000. An engineering study performed in 20X5 indicated that as of January 1, 20X5, 7,500,000 tons of limestones were available. 30. Assume that the materials and labor cost incurred during 20X5 is 2,160,000 and that 1,000,000 tons were sold during the year at P5.00, Gross Profit for the year is?arrow_forwardSh7arrow_forward5 My work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $9.11 million, and the equipment has a useful life of 7 years with a residual value of $1,200,000. The company will use straight- line depreciation. Beacon could expect a production increase of 44,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 71,000 units Proposed (automation) 115,000 units Per Per Production and sales volume Unit Total Unit Total Sales revenue $90 $ ? $90 $ ? Variable costs Direct materials $16 $ 16 Direct labor 15 ? Variable manufacturing overhead 9 9 Total variable manufacturing costs Contribution margin 40 ? $50 Fixed manufacturing costs Net operating income ? $ 1,130,000 $ 53 ? $…arrow_forward
- :57 El Dorado Foods Incorporated owns a chain of specialty stores in the Pacific Northwest. Recently, four of the stores have experienced declining profits due to market saturation in the area. As a result, management gathered data about possible impairment of the assets of the stores. The information gathered was as follows: Book value: $17.5 million Fair value: $14.9 million Undiscounted sum of future cash flows: $16.5 million Required: Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets. Note: Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Impairment loss millionarrow_forward4 02:59:09 Perez Company acquires an ore mine at a cost of $2,240,000. It incurs additional costs of $627,200 to access the mine, which is estimated to hold 1,600,000 tons of ore. 210,000 tons of ore are mined and sold the first year. The estimated value of the land after the ore is removed is $320,000. Calculate the depletion expense from the information given. 1. & 2. Prepare the entry to record the cost of the ore mine and year-end adjusting entry. Complete this question by entering your answers in the tabs below. eBook Depletion Expense General Journal Calculate the depletion expense from the information given. Note: Round "Depletion per unit" to 3 decimal places. Cost Salvage Amount subject to depletion Total units of capacity Depletion per unit Units extracted and sold in period Depletion expense Help Save &arrow_forwardFinsbury Co has a cash generating unit (CGU) that suffers a large drop in income due to reduced demand for its products. An impairment review was carried out and the recoverable amount of the cash generating unit was determined at $100m. The assets of the CGU had the following carrying amounts immediately prior to the impairment: $m Goodwill 25 Intangibles 60 Property, plant and equipment 30 Inventory 15 Trade receivables 10 140 The inventory and receivables are considered to be included at their recoverable amounts. What is the carrying amount of the intangibles once the impairment loss has been allocated? A $45m В $50m C $55m D $60marrow_forward
- 6arrow_forwardBlake Corporation has determined that one of its machines has experienced an impairment in value. However, the company expects to continue to use the asset for another 3 full years because no active market exists for this machine. Selected information on the impaired asset (on the date that impairment was determined to exist) is provided below. Original cost of the machine $22,000 Carrying amount of the machine 20, 000 Undiscounted future cash flows expected to be generated by the machine 15,000 Fair value of the machine (determined by calculating the present value of the future cash flows expected to be generated by the machine) 12,000 What is the amount of the impairment loss to be recorded by Blake? $3,000 $5,000 $7,000 $8,000arrow_forwardNonearrow_forward
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