80.2K

Verified Solution

Link Copied!

10) Starburst Manufacturing reports the following long-term assets for its lighting division: Estimated fair value $3,800,000 $3,500,000 Carrying value Factory building (shared with other divisions) $2,500,000 Less: Accumulated depreciation (1,000,000) Net book value $1,500,000 Land $1,750,000 Manufacturing equipment for lighting division $525,000 Less: Accumulated depreciation (150,000) Net book value $375,000 General factory equipment (used in several divisions) $1,600,000 Less: Accumulated depreciation (900,000 Net book value $700,000 $340,000 S650,000 Total net fixed assets $4,325,000 As a result of new technology, Starburst believes that the lighting division's equipment in their manufacturing facility is nearly obsolete. They project the following future cash flows for the lighting division's operations: Future period Year 1 Year 2 Year 3 Year 4 Year 5 Cash-flow projection $50,000 $35,000 $20,000 $12,000 $6,000 Compute the impairment loss, if any, for the appropriate asset group, assuming a discount rate of 8% and prepare the journal entry to record the loss. 10) Starburst Manufacturing reports the following long-term assets for its lighting division: Estimated fair value $3,800,000 $3,500,000 Carrying value Factory building (shared with other divisions) $2,500,000 Less: Accumulated depreciation (1,000,000) Net book value $1,500,000 Land $1,750,000 Manufacturing equipment for lighting division $525,000 Less: Accumulated depreciation (150,000) Net book value $375,000 General factory equipment (used in several divisions) $1,600,000 Less: Accumulated depreciation (900,000 Net book value $700,000 $340,000 S650,000 Total net fixed assets $4,325,000 As a result of new technology, Starburst believes that the lighting division's equipment in their manufacturing facility is nearly obsolete. They project the following future cash flows for the lighting division's operations: Future period Year 1 Year 2 Year 3 Year 4 Year 5 Cash-flow projection $50,000 $35,000 $20,000 $12,000 $6,000 Compute the impairment loss, if any, for the appropriate asset group, assuming a discount rate of 8% and prepare the journal entry to record the loss

Answer & Explanation Solved by verified expert

See Answer