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(Solution Download) General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in


 

 

 

 

 

 

 

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$48,500,000
  Accumulated

 

depreciation

15,800,000

 

  GeneralAc??cs estimate of the total cash flows to be

 

generated by selling the products manufactured at its Arizona

 

plant, not discounted to present value

 

18,200,000

 

 

 

 

 

 

 

The fair value of the Arizona

 

plant is estimated to be $19,000,000.

 

 

 

 

 

 

 

Required:

 

 

 

 

 

 

 

 

 

 

 

 

1.

 

Determine the amount of impairment loss. (Enter your

 

answer in whole dollars.)

 

Impairment

 

Loss_______________

 

 

 

 

 

 

 

 

2.

 

If a loss is indicated, where would it appear in General OpticAc??cs

 

multiple-step income statement?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses
Non-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.)

 

Record the entry of impairment loss. _____________

 

 

 

 

 

 

 

 

 

 

 

 

4.

 

Determine the amount of impairment loss assuming that the

 

estimated undiscounted sum of future cash flows is $20,000,000

 

instead of $18,200,000. (Enter your answer in whole

 

dollars.)

 

 

Impairment Loss.____________

 

 

 

 

 

 

 

 

 

 

 

 

5.

 

Determine the amount of impairment loss assuming that the

 

estimated undiscounted sum of future cash flows is $32,950,000

 

instead of $18,200,000.(Enter your answer in whole

 

dollars.)

 

Impairment Loss.

 

___________

 

 

 

 

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