Joburg Enterprises Ltd acquired a building in which to conduct its operations at a cost of...

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Joburg Enterprises Ltd acquired a building in which to conduct its operations at a cost of $10 million. The building generates no cash flows on its own and is considered a part of the cash-generating unit, which is the firm as a whole. Since the building was acquired, the value of inner-city properties has declined owing to an overabundance of office space and the downturn in the economy. The company would receive only $8 million dollars if it decided to sell the building now. However, the company believes the building is serving its purpose and the profits are high, so there is no current intention of selling the building. Required Discuss whether the building should be written down to $8 million. Provide any journal entries necessary. Joburg Enterprises Ltd acquired a building in which to conduct its operations at a cost of $10 million. The building generates no cash flows on its own and is considered a part of the cash-generating unit, which is the firm as a whole. Since the building was acquired, the value of inner-city properties has declined owing to an overabundance of office space and the downturn in the economy. The company would receive only $8 million dollars if it decided to sell the building now. However, the company believes the building is serving its purpose and the profits are high, so there is no current intention of selling the building. Required Discuss whether the building should be written down to $8 million. Provide any journal entries necessary.

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Discuss whether the building should be written down to 8 million The building should not ... View the full answer