Presented below is net asset information related to the Skysong Division of Santana, Inc.
Skysong Division |
|||
Cash |
$68 |
||
Accounts receivable |
201 |
||
Property, plant, and equipment (net) |
2,612 |
||
Goodwill |
218 |
||
Less: Notes payable |
(2,607 |
) |
|
Net assets | $492 |
The purpose of the Skysong 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 $425
million. Management has also received an offer to purchase the
division for $330 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 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation |
Debit |
Credit |
eTextbook and Media
List of Accounts
At December 31, 2021, it is estimated that the division’s fair value increased to $343 million. Prepare the journal entry to record this increase in fair value. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation |
Debit |
Credit |
eTextbook and Media
a | |||
As the estimated future cash flows is less than book value of net Assets, the division is impaired | |||
Account Titles and Explanation | Debit | Credit | |
Loss on impairment | 162000000 | =492000000-330000000 | |
Goodwill | 162000000 | ||
Alternatively, if amount is entered in millions: | |||
Account Titles and Explanation | Debit | Credit | |
Loss on impairment | 162 | =492-330 | |
Goodwill | 162 | ||
b | |||
Restoration of any impairment loss is not permitted | |||
Account Titles and Explanation | Debit | Credit | |
No entry | 0 | ||
No entry | 0 |
Presented below is net asset information related to the Skysong Division of Santana, Inc. Skysong Division...
Presented below is net asset information related to the Skysong Division of Santana, Inc. Skysong Division Net Assets As of December 31, 2020 (in millions) Cash $68 Accounts receivable 201 Property, plant, and equipment (net) 2,612 Goodwill 218 Less: Notes payable (2,607 ) Net assets $492 The purpose of the Skysong 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...
Exercise 12-14 Presented below is net asset information related to the Skysong Division of Santana, Inc SKYSONG DIVISION NET ASSETS AS OF DECEMBER 31, 2017 (IN HILLIONS) Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets $68 201 2,612 218 (2,607) $492 The purpose of the Skysong 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...
Presented below is net asset information related to the Windsor Division of Santana, Inc. Windsor Division Net Assets As of December 31, 2020 (in millions) $61 Cash 210 Accounts receivable Property, plant, and equipment (net) 2,605 Goodwill 211 Less: Notes payable (2,600) $487 Net assets The purpose of the Windsor 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...
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) $56 Cash Accounts receivable 205 Property, plant, and equipment (net) 2,600 Goodwill 206 Less: Notes payable (2,595) $472 Net assets 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...
Presented below is net asset information related to the Larkspur Division of Santana, Inc. $52 Larkspur Division Net Assets As of December 31, 2020 (in millions) Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets 201 2,596 202 (2,591) $460 The purpose of the Larkspur 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...
Presented below is net asset information related to the Teal Mountain Division of Santana, Inc. Teal Mountain Division Net Assets As of December 31, 2020 (in millions) Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets $71 204 2,615 200 (2,610) $480 The purpose of the Teal Mountain 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...
Presented below is net asset information related to the Kingbird Division of Santana, Inc. $51 Kingbird Division Net Assets As of December 31, 2020 (in millions) Cash Accounts receivable Property, plant, and equipment (net) Goodwill Less: Notes payable Net assets 200 2,595 201 (2,590 ) $457 The purpose of the Kingbird 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...
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...
Exercise 12-14 Presented below is net asset information related to the Tamarisk Division of Santana, Inc. TAMARISK DIVISION NET ASSETS AS OF DECEMBER 31, 2017 (IN MILLIONS) $59 208 Cash Accounts receivable Property, plant, and equipment (net)2,603 Goodwill Less: Notes payable Net assets 209 (2.598) $481 The purpose of the Tamarisk 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...
Presented below is information related to equipment owned by Skysong Company at December 31, 2020. $9,540,000 Cost Accumulated depreciation to date 1,060,000 Expected future net cash flows 7,420,000 Fair value 5,088,000 Skysong intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $21,200. As of December 31,2020, the equipment has a remaining useful life of 5 years. Prepare the journal entry (if any) to record the impairment of the asset...