Henne Optical Corporation reported the following information regarding long-term operating assets for its Lens Manufacturing Operations: Recent
Question:
Henne Optical Corporation reported the following information regarding long-term operating assets for its Lens Manufacturing Operations:
Recent advances in technology have rendered the company’s lens manufacturing operations nearly obsolete. Management projects the following future cash flows for its lens manufacturing operations.
Future Period Cash Flow Projection
Year 1 ……………………… $ 1,200,000
Year 2 ……………………… 750,000
Year 3 ……………………… 400,000
Year 4 ……………………… 350,000
Year 5 ……………………… 300,000
Total………………………… $ 3,000,000
Required
a. Determine the asset group for purposes of impairment testing and justify your decision.
b. Compute the impairment loss for the asset group identified in part (a) for the current year, if any.
c. Prepare the journal entry to record the impairment loss, if needed. CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella