Impairment; property, plant, and equipment
Response to the following problem:
Refer to the situation described in problem 1. Assume that the sum of estimated future cash flows is $24 million instead of $28 million. What amount of impairment loss should C&R recognize?
Problem 1:
Impairment; property, plant, and equipment
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?