Chadwick Enterprises, Incorporated, operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below at the end of 2024. Assume that Chadwick Enterprises prepares its financial statements according to International Financial Reporting Standards. Book value Estimated undiscounted sum of future cash flows Fair value Assume that the fair value amount given equals both (a) the fair value less costs to sell and (b) the present value of estimated future cash flows. Required: 1. Determine the amount of the impairment loss, if any, reported in the 2024 income statement. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.6 million and fair value is $5.9 million. Note: Enter your answers in millions rounded to 1 decimal place, (.e., 5,500,000 should be entered as 5.5). 1. Impairment loss Impairment loss S $ 8.3 million 4.9 million 4.4 million S 3.9 million (8.6) million

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Chadwick Enterprises, Incorporated, operates several restaurants throughout the Midwest. Three of its restaurants located in the
center of a large urban area have experienced declining profits due to declining population. The company's management has decided
to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below at the end of
2024. Assume that Chadwick Enterprises prepares its financial statements according to International Financial Reporting Standards.
Book value
Estimated undiscounted sum of future cash flows
Fair value
Assume that the fair value amount given equals both (a) the fair value less costs to sell and (b) the present value of estimated future
cash flows.
Required:
1. Determine the amount of the impairment loss, if any, reported in the 2024 income statement.
2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.6 million
and fair value is $5.9 million.
Note: Enter your answers in millions rounded to 1 decimal place, (.e., 5,500,000 should be entered as 5.5).
1. Impairment loss
2. Impairment loss
S
$ 8.3 million
4.9 million
4.4 million
S
3.9 million
(8.6) million
Transcribed Image Text:Chadwick Enterprises, Incorporated, operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below at the end of 2024. Assume that Chadwick Enterprises prepares its financial statements according to International Financial Reporting Standards. Book value Estimated undiscounted sum of future cash flows Fair value Assume that the fair value amount given equals both (a) the fair value less costs to sell and (b) the present value of estimated future cash flows. Required: 1. Determine the amount of the impairment loss, if any, reported in the 2024 income statement. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.6 million and fair value is $5.9 million. Note: Enter your answers in millions rounded to 1 decimal place, (.e., 5,500,000 should be entered as 5.5). 1. Impairment loss 2. Impairment loss S $ 8.3 million 4.9 million 4.4 million S 3.9 million (8.6) million
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