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Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below. Assume that Chadwick Enterprises prepares its financial statements according to International Financial Reporting Standards. Book value Estimated undiscounted sum of future cash flows Fair value Assume that the fair value amount given equals both (a) the fair value less costs to sell and (b) the present value of estimated future cash flows. Required: 1. Determine the amount of the impairment loss. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.8 million and fair value is $6.0 million. (For all requirements, negative amounts should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5)). 1. 2. $8.5 million 5.0 million 4.5 million Answer is complete but not entirely correct. Impairment loss Impairment loss $ 4.0 million $ 0.0 million

Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below. Assume that Chadwick Enterprises prepares its financial statements according to International Financial Reporting Standards. Book value Estimated undiscounted sum of future cash flows Fair value Assume that the fair value amount given equals both (a) the fair value less costs to sell and (b) the present value of estimated future cash flows. Required: 1. Determine the amount of the impairment loss. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.8 million and fair value is $6.0 million. (For all requirements, negative amounts should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5)). 1. 2. $8.5 million 5.0 million 4.5 million Answer is complete but not entirely correct. Impairment loss Impairment loss $ 4.0 million $ 0.0 million

Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter12: The Statement Of Cash Flows
Section: Chapter Questions
Problem 12.6DC
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Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below. Assume that Chadwick Enterprises prepares its financial statements according to International Financial Reporting Standards. Book value Estimated undiscounted sum of future cash flows Fair value Assume that the fair value amount given equals both (a) the fair value less costs to sell and (b) the present value of estimated future cash flows. Required: 1. Determine the amount of the impairment loss. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.8 million and fair value is $6.0 million. (For all requirements, negative amounts should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5)). 1. 2. $8.5 million 5.0 million 4.5 million Answer is complete but not entirely correct. Impairment loss Impairment loss $ 4.0 million $ 0.0 million
Transcribed Image Text:Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below. Assume that Chadwick Enterprises prepares its financial statements according to International Financial Reporting Standards. Book value Estimated undiscounted sum of future cash flows Fair value Assume that the fair value amount given equals both (a) the fair value less costs to sell and (b) the present value of estimated future cash flows. Required: 1. Determine the amount of the impairment loss. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.8 million and fair value is $6.0 million. (For all requirements, negative amounts should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5)). 1. 2. $8.5 million 5.0 million 4.5 million Answer is complete but not entirely correct. Impairment loss Impairment loss $ 4.0 million $ 0.0 million
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