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Cash Metlock Division Net Assets As of December 31, 2025 (in millions) Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable $54 203 2,598 204 (2,593)

Cash Metlock Division Net Assets As of December 31, 2025 (in millions) Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable $54 203 2,598 204 (2,593)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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@ Presented below is net asset information related to the Metlock Division of Santana, Inc. Cash Metlock Division Net Assets As of December 31, 2025 (in millions) Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets $54 203 2,598 204 (2,593) $466 The purpose of the Metlock 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 $425 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. Prepare the journal entry to record the impairment at December 31, 2025. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.) Account Titles and Explanation Debit Credit
Transcribed Image Text:@ Presented below is net asset information related to the Metlock Division of Santana, Inc. Cash Metlock Division Net Assets As of December 31, 2025 (in millions) Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets $54 203 2,598 204 (2,593) $466 The purpose of the Metlock 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 $425 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. Prepare the journal entry to record the impairment at December 31, 2025. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.) Account Titles and Explanation Debit Credit
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