The abrasives group of Chemical Products Inc. (CPI) has been suffering a decline in its...
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Accounting
The abrasives group of Chemical Products Inc. (CPI) has been suffering a decline in its business, due to new product introductions by competitors. At 31 December 20X5, the assets of the abrasives cash-generating unit are shown as follows (in millions) on the companys SFP:
Cost
Accumulated Depreciation
Net Book Value
Equipment (10-year life)
$
1,300
$
670
$
630
Fixtures (10-year life)
610
130
480
Patent rights (40-year life)
400
170
230
$
2,310
$
970
$
1,340
An impairment test indicates that the recoverable amount of the abrasives cash-generating units assets is $940 million. The assets are not separablethey must be operated or sold together as a group. No individual asset has a determinable individual fair value less cost to disposal. Required: 1. Prepare an adjusting journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions.)
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