LUS Kiese (AF 310) Bridgeport Enterprises, Inc. operates several stores (combine

Question

LUS Kiese (AF 310) Bridgeport Enterprises, Inc. operates several stores (combined). The five stores' sales have declined due to aging facilities and competition frem a rival that opened new Original cost $36,078,900 $9,856,000 4 years Estimated expected future annual cash flows (not discounted) $3,766,200 million per year Appropriate discount rate 5 percent (a) the five stores on ts fiscal year-end 2016 balance sheet. Assume that the cash flows occur at the end of each year. (Round present valve factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to o decimal pfaces e.g. 5,125. If no loss, enter amount as o.) Version 4.24

Explanation / Answer

Answer a. Original Cost    36,078,900.00 Accumulated Depreciation      9,856,000.00 Book Value    26,222,900.00 Future Cash Flow = $3,766,200 X 3.545951 Future Cash Flow = $13,354,758.79 or say $13,354,759 Book Value > Discounted Future Cash Flow So, there is impairment loss Book Value          26,222,900 Estimated Fair Value          13,354,759 Impairment Loss          12,868,141 Answer b. Future Cash Flow = $2,747,080 X 7.360087 Future Cash Flow = $20,218,747.94 or say $20,218,747 Book Value > Discounted Future Cash Flow So, there is impairment loss Book Value          26,222,900 Estimated Fair Value          20,218,748 Impairment Loss            6,004,152

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