Question

Exercise 12-14 Presented below is net asset information related to the Shamrock Division of Santana, Inc. Shamrock Division Net Assets As of December 31, 2020 (in millions) Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets $56 205 2,600 206 (2,595) $472 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 $435 million. Management has also received an offer to purchase the division for $335 million (deemed an appropriate fair value). All identifiable assets' and liabilities' book and fair value amounts are the same. Prepare the journal entry to record the impairment at December 31, 2020. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS

Answer 1

Account Titles and Explanation	Debit	Credit
Loss on impairment	137
Goodwill		137
Workings:
Net assets	472
Less: Fair value of net assets	335
Loss on impairment	137