Collinsworth LTD., a U.K. company, prepares its financial statements according to International Financial Reporting Standards. Late in

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Collinsworth LTD., a U.K. company, prepares its financial statements according to International Financial Reporting Standards. Late in its 2018 fiscal year, a significant adverse change in business climate indicated to management that the assets of its appliance division may be impaired. The following data relate to the division's assets:
__________________________________________ (£ in millions)
Book value ........................................................ £220
Undiscounted sum of estimated future cash flows ........... 210
Present value of future cash flows ............................. 150
Fair value less cost to sell (determined by appraisal) ........ 145
Required:
1. What amount of impairment loss, if any, should Collinsworth recognize?
2. Assume that Collinsworth prepares its financial statements according to U.S. GAAP and that fair value less cost to sell approximates fair value. What amount of impairment loss, if any, should Collinsworth recognize?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...
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Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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