E12.15 (LO.3, 4) (Goodwill Impairment) The following is net asset information related to the Ting Division of Santana Ltd. Ting Division Net Assets As of December 31, 2022 (in millions) Property, plant, and equipment (net) HK$2,600 Goodwill 200 Accounts receivable 200 Cash 60 Less: Notes payable (2,700) HK$ 360 Net assets The purpose of the Ting Division (cash-generating unit) 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 HK$400 million. Management has also received an offer to purchase the division for HK$335 million (fair value less costs to sell). All identifiable assets' and liabilities' book and fair value amounts are the same. Instructions a. Prepare the journal entry (if any) to record the impairment at December 31, 2022. b. At December 31, 2023, it is estimated that the division's recoverable amount increased to HK$345 million. Prepare the journal entry (if any) to record this increase in fair value.

E12.15 (LO.3, 4) (Goodwill Impairment) The following is net asset information related to the Ting Division of Santana Ltd. Ting Division Net Assets As of December 31, 2022 (in millions) Property, plant, and equipment (net) HK$2,600 Goodwill 200 Accounts receivable 200 Cash 60 Less: Notes payable (2,700) HK$ 360 Net assets The purpose of the Ting Division (cash-generating unit) 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 HK$400 million. Management has also received an offer to purchase the division for HK$335 million (fair value less costs to sell). All identifiable assets' and liabilities' book and fair value amounts are the same. Instructions a. Prepare the journal entry (if any) to record the impairment at December 31, 2022. b. At December 31, 2023, it is estimated that the division's recoverable amount increased to HK$345 million. Prepare the journal entry (if any) to record this increase in fair value.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Sarasota Corporation and Marigold Corporation, two companies of roughly the same size, are both involved in the manufacture of shoe-tracing devices. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the following information. Net income Sales revenue Total assets (average) Plant assets (average) Intangible assets (goodwill) (a) (1) (2) (3) Return on assets Profit margin Asset turnover Sarasota Corp. $ 237,540 Save for Later 1,187,700 3,210,000 2,430,000 387,100 For each company, calculate these values: (Round answers to 2 decimal places, e.g. 6.25% or 17.54.) Marigold Corp. $316,050 Sarasota Corp. 1,264,200 3,010,000 1,828,000 do % do % 0 times Marigold Corp. % do % times Attempts: 0 of 3 used Submit Answer
Windsor Company exchanged equipment used in its manufacturing operations plus $3,480 in cash for similar equipment used in the operations of Sheridan Company. The following information pertains to the exchange. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.
Exercise 7-6 (Algo) Calculate the amount of goodwill (LO7-2) Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $44,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities Required: Book Value $ 16,000,000 30,800,000 5,200,000 9,600,000 16,400,000 Fair Value $ 19,000,000 36,800,000 6,200,000 9,600,000 15,400,000 Calculate the amount paid for goodwill. (Enter your answer in millions (i.e. 5,000,000 should be entered as 5).) Amount paid for goodwill million
305. Subject : - Accounting
Information has been collected regarding Orange Company’s cash-generating unit that includes goodwill. At 31 December 20X5, the assets of the Orange Company’s cash-generating unit are shown as follows (in millions) on the company’s SFP: Cost Accumulated Depreciation Net Book Value Goodwill $ 1,360 $ 0 $ 1,360 Equipment 4,850 3,150 1,700 Building 7,320 2,330 4,990 Patent rights 1,290 320 970 $ 14,820 $ 5,800 $ 9,020 An impairment test indicates that the recoverable amount assigned to the assets of this CGU is $6,200 million. The assets are not separable—they must be operated or sold together as a group.Required:1. Prepare an adjusting journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate percentage answers to the nearest whole number (i.e.…
From page 7-1 of the VLN, acquisition cost would NOT include: A. Purchase price. B. Transportation cost to get the asset ready to be used. C. Sales taxes. D. Cost incurred to operate the asset.
Information has been collected regarding Orange Company’s cash-generating unit that includes goodwill. At 31 December 20X5, the assets of the Orange Company’s cash-generating unit are shown as follows (in millions) on the company’s SFP: Cost Accumulated Depreciation Net Book Value Goodwill $ 1,360 $ 0 $ 1,360 Equipment 4,850 3,150 1,700 Building 7,320 2,330 4,990 Patent rights 1,290 320 970 $ 14,820 $ 5,800 $ 9,020 An impairment test indicates that the recoverable amount assigned to the assets of this CGU is $6,200 million. The assets are not separable—they must be operated or sold together as a group.Required:1. Prepare an adjusting journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate percentage answers to the nearest whole number (i.e.…
On july 1, 2021, JULIA exchanged its-non-monetary asset (equipment) with GERALD's non-monetary asset (machinery). the following data were made available: JULIA: Equipment P4,400,000 accumulated depreciation 2,000,000 cash received from gerald 500,000 GERALD: Machinery P3,700,000 Accumulated depreiation 1,800,000 Fair value of the machinery 2,100,000 The transaction lack commerical substance. How much is the cost of the new asset of JULIA?
A company from China has cash of CNY 15,000; Outstanding expense CNY 7,000. Total amount of CNY 5,000 is shown as accounts payable. The current spot rate is CNY 16.81/OMR; CNY 6.47/USD (Direct). On the basis of this information, answer the following questions. of a) Determine the net exposed assets in terms of CNY: CNY 10,000 b) Determine the net exposed assets in terms of OMR: c) Determine net exposed assets in terms of USD: P T4