Presented below is net asset information related to the Ting Division of Santana, Inc.

The purpose of the Ting Division (cash-generating unit) 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 HK\($400\) million.
Management has also received an offer to purchase the division for HK\($335\) million (fair value less costs to sell). All identifiable assets’ and liabilities’ book and fair value amounts are the same.
Instructions

(a) Prepare the journal entry (if any) to record the impairment at December 31, 2015.

(b) At December 31, 2016, it is estimated that the division’s recoverable amount increased to HK\($345\) million. Prepare the journal entry (if any) to record this increase in fair value.

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TING DIVISION NET ASSETS AS OF DECEMBER 31, 2015 (IN MILLIONS) Property, plant, and equipment (net) HK$2,600 Goodwill 200 Accounts receivable Cash Less: Notes payable Net assets 200 60 (2,700) HK$ 360