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 restaurants for possible impairment. The relevant information is presented below. Book value $6.5 million Estimated undiscounted sum of future cash flows 6.5 million Fair value of assets 8.5 million Fair value of liabilities 2.25 million Question What is the amount of the impairment loss, if any? $250,000 $2,000,000 $6,250,000 No impairment is indicated
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 restaurants for possible impairment. The relevant information is presented below. Book value $6.5 million Estimated undiscounted sum of future cash flows 6.5 million Fair value of assets 8.5 million Fair value of liabilities 2.25 million Question What is the amount of the impairment loss, if any? $250,000 $2,000,000 $6,250,000 No impairment is indicated
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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 restaurants for possible impairment. The relevant information is presented below.
|
Book value |
$6.5 million |
|
Estimated undiscounted sum of future |
6.5 million |
|
Fair value of assets |
8.5 million |
|
Fair value of liabilities |
2.25 million |
Question
What is the amount of the impairment loss, if any?
|
$250,000 |
||
|
$2,000,000 |
||
|
$6,250,000 |
||
|
No impairment is indicated |
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