The following is net asset information related to the Carlos de Santana, Inc. Division.

CARLOS DIVISION NET ASSETS AS OF DECEMBER 31, 2014 (IN MILLIONS)
Money		$65
accounts receivable		201
Property, plant and equipment, net)		2,615
Goodwill		210
Less: Unpaid documents		(2,617	)
net assets		$474

The goal of the Carlos Division is to develop a nuclear-powered aircraft. If successful, travel delays associated with refueling could be substantially reduced. Many other benefits would also occur. Management to date has not been very successful and is deciding whether a write-down at this time is appropriate. Management estimated its future net cash flows from the project at $437 million. Management also received an offer to buy the division for $342 million. All book and fair value values of identifiable assets and liabilities are the same.

Instructions:

a. Prepare the journal entry (if any) to record the impairment at December 31, 2014.

b. At December 31, 2015, it is estimated that the division's fair value increased to $345 million. Prepare the journal entry (if any) to record this increase in fair value.

Answer rating: 100% (QA)

a To prepare the journal entry to record the impairment of the Carlos Divisions net assets at Decemb... View the full answer