Exercise - Impairment; property, plant, and equipment

FratBro23
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Other
Price: $5 USD

Question description

General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost $ 50,500,000 Accumulated depreciation 16,000,000 General’s estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value 18,600,000 The fair value of the Arizona plant is estimated to be $20,000,000. Required: 1. Determine the amount of impairment loss. (Enter your answer in whole dollars.) 2. If a loss is indicated, where would it appear in General Optic’s multiple-step income statement? Non-operating expenses Operating expenses 3. If a loss is indicated, prepare the entry to record the loss. (If no entry is required for an event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) 4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is $21,000,000 instead of $18,600,000. (Enter your answer in whole dollars.) 5. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is $36,500,000 instead of $18,600,000.(Enter your answer in whole dollars.)

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(Top Tutor) Daniel C.
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