Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 12, Problem 12.1E
Tangible Asset Impairment. Henne Optical Corporation reported the following information regarding long-term operating assets for its Lens Manufacturing Operations:
| Description | Canning Value | Estimated Fair Value |
| Factory building (used in several segments) | $10,000,000 | |
| Less: |
(4,500,000) | |
| Net book value | $ 5,500,000 | $ 8,900,000 |
| Land | $ 7,000,000 | $14,000,000 |
| Lens manufacturing equipment | $ 2,100,000 | |
| Less: Accumulated depreciation | (600,000) | |
| Net book value | $ 1,500,000 | $ 1,100,000 |
| Lens polishing equipment | $ 3,000,000 | |
| Less: Accumulated depreciation | (1,200,000) | |
| Net book value | $1,800,000 | $ 1,625,000 |
| General factory equipment (used in several segments) | $6,500,000 | |
| Less: Accumulated depreciation | (4,000,000) | |
| Net book value | $ 2,500,000 | $ 2.400.000 |
| Delivery trucks (used in several segments) | $ 1,750,000 | |
| Less: Accumulated depreciation | (300,000) | |
| Net book value | $1,450,000 | $ 1,125,000 |
| Total net fixed assets | $19,750,000 |
Recent advances in technology have rendered the company’s lens manufacturing operations nearly obsolete. Management projects the following future cash flows for its lens manufacturing operations.
| Future Period | Cash-Flow Projection |
| Year 1 | $1,200,000 |
| Year 2 | 750,000 |
| Year 3 | 400,000 |
| Year 4 | 350,000 |
| Year 5 | 300,000 |
| Total | $3,000,000 |
Required
- a. Determine the asset group for purposes of impairment testing and justify your decision.
- b. Compute the impairment loss for the asset group identified in part (a) for the current year, if any.
- c. Prepare the
journal entry to record the impairment loss, if needed.
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Chapter 12 Solutions
Intermediate Accounting
Ch. 12 - Prob. 12.1QCh. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.1MCCh. 12 - Prob. 12.2MCCh. 12 - Prob. 12.3MCCh. 12 - Prob. 12.4MCCh. 12 - Prob. 12.5MCCh. 12 - Prob. 12.6MCCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Indefinite-Life Intangible Asset Impairment....Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Impairment Reversal. IFRS. Perlu Products an IFRS...Ch. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.21BECh. 12 - Prob. 12.22BECh. 12 - Prob. 12.23BECh. 12 - Tangible Asset Impairment. Henne Optical...Ch. 12 - Tangible Asset Impairment Loss. Use the same...Ch. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Tangible Asset Impairment Loss, IFRS. Use the same...Ch. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Assets Held for Disposal. Hattie Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Asset Revaluation, Downwards, IFRS. Lousa Company...Ch. 12 - Tangible Asset Impairment. Chrispian Cookies, Inc....Ch. 12 - Prob. 12.2PCh. 12 - Tangible Asset Impairment. Using the same...Ch. 12 - Prob. 12.4PCh. 12 - Goodwill Impairment, Tangible Fixed Assets, and...Ch. 12 - Tangible Asset Impairment, Potential Reversal,...Ch. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Comprehensive Asset Revaluation Problem (Initial...Ch. 12 - Prob. 12.11PCh. 12 - Judgment Case 1: Impairments of PPE under IFRS...Ch. 12 - Prob. 2JCCh. 12 - Prob. 3JCCh. 12 - Surfing the Standards Case 1: Impairments of PPE...Ch. 12 - Prob. 2SSCCh. 12 - Financial Statement Analysis Case 1: Long-Lived...Ch. 12 - Prob. 1BCCCh. 12 - Basis for Conclusions Case 2: Intangible Assets ...Ch. 12 - Basis for Conclusions Case 3: Goodwill Impairment...
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