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The following is net asset information for the Dhillon Division of Blue Spruce Inc.: Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable NET ASSETS As at December 31, 2023 (in millions) Net assets Book Value $51 218 2,645 213 (2,640) $487 Fair Value Excluding Goodwill $51 218 2,821 (2,640) The purpose of the Dhillon Division (also identified as a reporting unit or cash-generating unit) is to develop a nuclear-powered aircraft. If successful, travelling delays that are associated with refuelling could be greatly reduced, and operational efficiency would increase significantly. To date, management has not had much success and is deciding whether a writedown of goodwill is appropriate at this time. Management has prepared the following estimates for the reporting unit or cash-generating unit: 1. Undiscounted future net cash flows are approximately $422 million. 2. Future value in use is approximately $482 million. 3. Sale of the unit would yield $357 million and selling costs would total $8 million.

The following is net asset information for the Dhillon Division of Blue Spruce Inc.: Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable NET ASSETS As at December 31, 2023 (in millions) Net assets Book Value $51 218 2,645 213 (2,640) $487 Fair Value Excluding Goodwill $51 218 2,821 (2,640) The purpose of the Dhillon Division (also identified as a reporting unit or cash-generating unit) is to develop a nuclear-powered aircraft. If successful, travelling delays that are associated with refuelling could be greatly reduced, and operational efficiency would increase significantly. To date, management has not had much success and is deciding whether a writedown of goodwill is appropriate at this time. Management has prepared the following estimates for the reporting unit or cash-generating unit: 1. Undiscounted future net cash flows are approximately $422 million. 2. Future value in use is approximately $482 million. 3. Sale of the unit would yield $357 million and selling costs would total $8 million.

FINANCIAL ACCOUNTING
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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The following is net asset information for the Dhillon Division of Blue Spruce Inc.: Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets NET ASSETS As at December 31, 2023 (in millions) (a) Your answer is correct. Book Value Date $51 Dec. 31, 2023 218 2,645 213 Loss on Impairment (2,640) $487 The purpose of the Dhillon Division (also identified as a reporting unit or cash-generating unit) is to develop a nuclear-powered aircraft. If successful, travelling delays that are associated with refuelling could be greatly reduced, and operational efficiency would increase significantly. Fair Value Excluding Goodwill To date, management has not had much success and is deciding whether a writedown of goodwill is appropriate at this time. Management has prepared the following estimates for the reporting unit or cash-generating unit: 1. Undiscounted future net cash flows are approximately $422 million. 2. Future value in use is approximately $482 million. 3. Sale of the unit would yield $357 million and selling costs would total $8 million. $51 Account Titles and Explanation 218 2,821 Under ASPE, determine if there is any impairment and prepare any necessary entry on December 31, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts. List debit entry before credit entry. ENTER AMOUNTS IN MILLIONS.) (2,640) Accumulated Impairment Losses - Goodwill Debit 130 Credit 130
Transcribed Image Text:The following is net asset information for the Dhillon Division of Blue Spruce Inc.: Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets NET ASSETS As at December 31, 2023 (in millions) (a) Your answer is correct. Book Value Date $51 Dec. 31, 2023 218 2,645 213 Loss on Impairment (2,640) $487 The purpose of the Dhillon Division (also identified as a reporting unit or cash-generating unit) is to develop a nuclear-powered aircraft. If successful, travelling delays that are associated with refuelling could be greatly reduced, and operational efficiency would increase significantly. Fair Value Excluding Goodwill To date, management has not had much success and is deciding whether a writedown of goodwill is appropriate at this time. Management has prepared the following estimates for the reporting unit or cash-generating unit: 1. Undiscounted future net cash flows are approximately $422 million. 2. Future value in use is approximately $482 million. 3. Sale of the unit would yield $357 million and selling costs would total $8 million. $51 Account Titles and Explanation 218 2,821 Under ASPE, determine if there is any impairment and prepare any necessary entry on December 31, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts. List debit entry before credit entry. ENTER AMOUNTS IN MILLIONS.) (2,640) Accumulated Impairment Losses - Goodwill Debit 130 Credit 130
On December 31, 2024, it is estimated that the reporting unit's fair value has increased to $422 million. Under ASPE, prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List debit entry before credit entry. ENTER AMOUNTS IN MILLIONS.) (c) Date (d) Dec. 31, 2024 eTextbook and Media Account Titles and Explanation List of Accounts Date No Entry Your answer is correct. Dec. 31, 2023 No Entry Under IFRS, determine if there is any impairment and prepare any necessary entry on December 31, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts. List debit entry before credit entry. ENTER AMOUNTS IN MILLIONS.) Date Dec. 31, 2024 Account Titles and Explanation Loss on Impairment eTextbook and Media Accumulated Impairment Losses - Goodwill List of Accounts Debit Account Titles and Explanation Debit Credit 5 Debit Attempts: 1 of 3 used 0 Credit On December 31, 2024, it is estimated that the cash-generating unit's fair value has increased to $422 million. Under IFRS, prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List debit entry before credit entry. ENTER AMOUNTS IN MILLIONS.) 5 Attempts: 1 of 3 used Credit
Transcribed Image Text:On December 31, 2024, it is estimated that the reporting unit's fair value has increased to $422 million. Under ASPE, prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List debit entry before credit entry. ENTER AMOUNTS IN MILLIONS.) (c) Date (d) Dec. 31, 2024 eTextbook and Media Account Titles and Explanation List of Accounts Date No Entry Your answer is correct. Dec. 31, 2023 No Entry Under IFRS, determine if there is any impairment and prepare any necessary entry on December 31, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts. List debit entry before credit entry. ENTER AMOUNTS IN MILLIONS.) Date Dec. 31, 2024 Account Titles and Explanation Loss on Impairment eTextbook and Media Accumulated Impairment Losses - Goodwill List of Accounts Debit Account Titles and Explanation Debit Credit 5 Debit Attempts: 1 of 3 used 0 Credit On December 31, 2024, it is estimated that the cash-generating unit's fair value has increased to $422 million. Under IFRS, prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List debit entry before credit entry. ENTER AMOUNTS IN MILLIONS.) 5 Attempts: 1 of 3 used Credit
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