Chapter 11 Homework -) C | ? ezto.mheducation.com/hm.tpx Econnect ACCOUNTING Cha

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Chapter 11 Homework -) C | ? ezto.mheducation.com/hm.tpx Econnect ACCOUNTING Chapter 11 Homework value 5.00 points Collison and Ryder Company (C&R;) has been experiencing declining market conditions for its sportswear division. Management decided to test the assets of the division for possible impairment. The test revealed the following: book value of division's assets, $29.1 million; fair value of division's assets, $22.3 million; sum of estimated future cash flows generated from the division's assets, $29.3 million. What amount of impairment loss should C&R; recognize? (Enter your answer in whole dollars.) ent References eBook & Resources Worksheet Dificulty: 2 Medium

Explanation / Answer

V1 = Book value = 29.10

V2 = Value of future cash flows expected to be generated from this longterm asset = 29.30

Unless V2 < V1, there is no need for impairment of asset. That means expected future benefits are more than current book value, hence asset under consideration is not subjected to any impairment.

Impairment loss to be recognized = 0

OR

If V2 < V1 then amount of Impairment loss to be recognized = Book value - fair value = 29.10 - 22.30 = 6800,000

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