Financial Accounting
3rd Edition
ISBN: 9780078025549
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 7, Problem 7.20E
1.
To determine
The amount of impairment loss.
2.
To determine
The amount of impairment loss, if the future cash flows are $10 Million and the fair value is $8.2 Million.
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Midwest Services, Inc., operates several restaurant chains throughout the Midwest. One restaurant chain has experienced sharply declining profits. The company’s management has decided to test the operational assets of the restaurants for possible impairment. The relevant information for these assets is presented below.Book value $8.6 millionEstimated total future cash flows 7.1 million Fair value 5.9 millionRequired:1. Determine the amount of the impairment loss, if any.2. Repeat requirement 1 assuming that the estimated total future cash flows are $10 million and the fair value is $8.2 million.
Required information
[The following information applies to the questions displayed below.]
Southeast Services, Incorporated, operates several restaurant chains throughout the Southeast. One restaurant chain has
experienced sharply declining profits. The company's management has decided to test the operational assets of the
restaurants for possible impairment. The relevant information for these assets is presented below.
Book value
Estimated total future cash flows.
Fair value
Required:
1. Determine the amount of the impairment loss, if any. (Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000
should be entered as 5.5).)
Impairment loss
$ 8.7 million
7.3 million
6.2 million
million
Required information
[The following information applies to the questions displayed below)
El Dorado Foods Inc. owns a chain of specialty stores in the Pacific Northwest. Recently, four of the stores have
experienced declining profits due to market saturation in the area. As a result, management gathered data about possible
impairment of the assets of the stores. The information gathered was as follows
Book value: $1775 million
Fair value (Present value of future cash flows): $14.95 milion
Undiscounted sum of future cash flows: $16.75 million
Required:
Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets. (Enter your answer in millions
rounded to 2 decimal places (I.e., 5,500,000 should be entered es 5.50).)
Impairment loss
million
Chapter 7 Solutions
Financial Accounting
Ch. 7 - Prob. 1RQCh. 7 - What are the two major categories of long-term...Ch. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Equipment includes machinery used in manufacturing...Ch. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQ
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