I don’t know how to handle this Accounting question and need guidance.
here is one of the questions
Presented below is net asset information related to the Metlock Division of Santana, Inc.
As of December 31, 2020
|Property, plant, and equipment (net)||
|Less: Notes payable||
The purpose of the
Metlock Division 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 $
425 million. Management has also received an offer to purchase the division for $335 million (deemed an appropriate fair value). All identifiable assets’ and liabilities’ book and fair value amounts are the same.
Prepare the journal entry to record the impairment at December 31, 2020.
At December 31, 2021, it is estimated that the division’s fair value increased to $346 million. Prepare the journal entry to record this increase in fair value.