SHAMROCK DIVISION NET ASSETS AS OF DECEMBER 31, 2017 (IN MILLIONS) $67 200 2,611

Question

SHAMROCK DIVISION
NET ASSETS
AS OF DECEMBER 31, 2017
(IN MILLIONS)

$67

200

2,611

217

(2,606

)

Account Titles and Explanation

Debit

Credit

Presented below is net asset information related to the Shamrock Division of Santana, Inc.

SHAMROCK DIVISION
NET ASSETS
AS OF DECEMBER 31, 2017
(IN MILLIONS)

Cash

$67

Accounts receivable

200

Property, plant, and equipment (net)

2,611

Goodwill

217

Less: Notes payable

(2,606

)

Net assets $489
The purpose of the Shamrock Division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduced. Many other benefits would also occur. To date, management has not had much success and is deciding whether a write-down at this time is appropriate. Management estimated its future net cash flows from the project to be $410 million. Management has also received an offer to purchase the division for $335 million. All identifiable assets’ and liabilities’ book and fair value amounts are the same.

Explanation / Answer

Prepare the journal entry to record the impairment at December 31, 2017.

Account titles and explanation Debit Credit Loss on impairment 154 Goodwill 154

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