Presented below is net asset information related to the Shamrock Division of Santana, Inc. Shamrock Division Net Assets As of December 31, 2020 (in millions) Cash $67 Accounts receivable 200 Property, plant, and equipment (net) 2,611 Goodwill 217 Less: Notes payable (2,606 ) Net assets $489 The purpose of the Shamrock 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 $410 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, 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit LINK TO TEXT LINK TO TEXT At December 31, 2021, it is estimated that the division’s fair value increased to $345 million. Prepare the journal entry 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

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Presented below is net asset information related to the Shamrock Division of Santana, Inc.

Shamrock Division Net Assets As of December 31, 2020 (in millions)
Cash	$67
Accounts receivable	200
Property, plant, and equipment (net)	2,611
Goodwill	217
Less: Notes payable	(2,606	)
Net assets	$489

The purpose of the Shamrock 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 $410 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, 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

LINK TO TEXT

At December 31, 2021, it is estimated that the division’s fair value increased to $345 million. Prepare the journal entry to record this increase in fair value.

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