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, $26.5 million; fair value of division's assets, $21 million; undiscounted sum of estimated future cash flows generated from the division's assets, $24 million. What amount of impairment loss should C&R recognize? (Enter your answer in millions rounded to 1 decimal place (i.e., 3,300,000 should be entered as 3.3).) Impairment loss million

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, $26.5 million; fair value of division's assets, $21 million; undiscounted sum of estimated future cash flows generated from the division's assets, $24 million. What amount of impairment loss should C&R recognize? (Enter your answer in millions rounded to 1 decimal place (i.e., 3,300,000 should be entered as 3.3).) Impairment loss million

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 57RSCQ

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Collision and Ryder Company (C&R) has been experiencing declining market condtions 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, $28.9 million; fair value of division's assets, $22.2 million; undiscounted sum of estimated future cash flows generated from the division's assets, $29.2 million. What amount of impairment loss should C&R recognize?
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, $29.7 million; fair value of division’s assets, $22.6 million; undiscounted sum of estimated future cash flows generated from the division’s assets, $25.6 million. What amount of impairment loss should C&R report in its income statement? Note: Enter your answer in millions rounded to 1 decimal place (i.e., 3,300,000 should be entered as 3.3).
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, $29.7 million; fair value of division’s assets, $22.6 million; undiscounted sum of estimated future cash flows generated from the division’s assets, $30.3 million.
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, $26.5 million; fair value of division’s assets, $21 million; undiscounted sum of estimated future cash flows generated from the division’s assets, $28 million. What amount of impairment loss should C&R recognize?
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, $26.5 million; fair value of division’s assets, $21 million; sum of estimated future cash flows generated from the division’s assets, $28 million. What amount of impairment loss should C&R recognize?
El Dorado Foods Incorporated 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: $17.5 million Fair value: $14.9 million Undiscounted sum of future cash flows: $16.5 million Required: Assume that the undiscounted sum of future cash flows is $18.2 million, instead of $16.5 million. Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets. Note: Enter your answer in millions (i.e., 5,000,000 should be entered as 5). Impairment loss 13 Show Transcribed Text Impairment loss C Required: Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets. Note: Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). $ C…
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.
ARISE Co. has suffered operating losses for some time, but is now operating profitably and expects to continue to do so. Current and projected income, however will not be sufficient to eliminate the deficit in the near term. It also appears that plant assets are overstated considering current prices and economic conditions. After receiving permission from the government authorities and approval from shareholders, the board of directors decides to restate the company assets and paid-in capital balances in order to remove the deficit and make possible the declaration of dividends from profitable operations. A balance sheet for the company just prior to this action is presented: 250,000 1,500,000 Current Assets P.P.E (600,000) 1,150,000 Accumulated Depreciation Total Liabilities 300,000 Ordinary shares, P10 par, 100,000 shares 1,000,000 100,000 (250,000) Share Premium Retained Earnings (deficit) Total 1,150,000 Assuming that the quasi reorganization shall be accomplished as follows: a.…
The demand for one of the major products for a company sustained large and continuing declines. As a result, the company performed an asset impairment test on the fixed assets that were associated with the product. The book value of those assets was $2,000,000. The company estimated the future undiscounted cash flows associated with those assets were $1,840,459. The fair value of those assets was $1,632,397. What amount of impairment should the company record? Provide your answer to the nearest whole dollar (i.e., No decimal places.)
ARISE CO. has suffered operating losses for some time, but is now operating profitably and expects to continue to do so. Current and projected income, however will not be sufficient to eliminate the deficit in the near term. It also appears that plant assets are overstated considering current prices and economic conditions. After receiving permission from the government authorities and approval from shareholders, the board of directors decides to restate the company assets and paid-in capital balances in order to remove the deficit and make possible the declaration of dividends from profitable operations. A balance sheet for the company just prior to this action is presented: 250,000 1,500,000 (600,000) 1,150,000 Current Assets P.P.E Accumulated Depreciation Total 3. Liabilities 300,000 Ordinary shares, P10 par, 100,000 shares Share Premium 1,000,000 100,000 (250,000) 1,150,000 Retained Earnings (deficit) Total Assuming that the cuasi reorgarization shall be accomplished as follows: a.…
Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company’s management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below. Book value $ 10.1 million Estimated undiscounted sum of future cash flows 5.8 million Fair value 5.3 million Required:1. Determine the amount of the impairment loss.2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $10.4 million and fair value is $6.8 million.
Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below. Book Value $8.1 million Estimated undiscounted sum of future cash flows 4.1 million Fair Value 4.3 million Required: 1. Determine the amount of the impairment loss. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.4 million and fair value is $5.8 million. (Negative amounts should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal…