Question

Each of the following five cases is independent: a. Marlene Incorporated produces several lines of office furniture. All of the furniture is sold through sales agents who sell the full array of lines. Each line is developed by the com-pany internally, and the development costs are capitalized and amortized over 12 years. After several years of high revenue, one of Marlene’s lines has recently suffered a significant decline. Marlene is considering shutting down production and discontinuing the line. About 40% of the development cost has not yet been amortized. b. Antigonish Actuators Limited ( AAL) has a production and sales division in northern Ontario. he divisional vice- president reports directly to the AAL CEO. AAL is decen-tralized, and the Northern Ontario division is one of several such divisions. he Northern Ontario division has operated at a loss for the past two years, and future prospects seem dim. he division has substantial property, plant, and equipment. c. Canadian Wheels Corporation operates hardware and automotive stores throughout Canada. A few years ago, the company opened a series of stores in the northwestern United States. he new stores have not been doing well, and the company is thinking of selling them or shutting them down.
d. Capital Helicopter Services Corporation ( CHSC) provides helicopter services for other corporations, mainly those in the resource industry that need extensive helicopter ser-vices for ofshore oil and gas platforms, forestry operations, and otherwise inaccessible field operations. In addition, the company operates a separate division within Canada that manufactures airframe parts for manufacturers. his division is completely separate from the company’s other operations and has a separate reporting line directly to the company’s senior management. he division generates more than 10% of the company’s overall revenues. However, the division has become only marginally profitable, and CHSC management has decided to sell the division and has put a plan for disposition in place. e. Several years ago, Robertson Connectors Corporation (RCC) purchased the patents for a new type of connector. he new connector has enjoyed great success until recently. A competitor introduced a new product that is almost the same as RCC’s product and that can be used interchangeably. RCC launched a patent infringement suit against the competitor, and RCC management was confident of success. In 20X4, however, the court ruled against RCC, thereby leaving the competitor free to continue its product. RCC management is considering whether to appeal the decision. Required: For each situation, explain whether an impairment test is necessary. If you need more infor-mation, explain what information you need and why you need it.



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  • CreatedFebruary 17, 2015
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