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. 0.12 should be considered as 12%) and final answers to the nearest whole dollar amount. Enter the amounts in millions.)
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. 0.12 should be considered as 12%) and final answers to the nearest whole dollar amount. Enter the amounts in millions.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Information has been collected regarding Orange Company’s cash-generating unit that includes
| Cost | 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
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