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snow_tiger [21]
3 years ago
5

ACME Drilling is evaluating an offshore oil-drilling platform for possible impairment. The company estimates the following: book

value, $18.6 million; fair value, $11.7 million; sum of estimated future cash flows generated from the oil-drilling platform, $16.4 million. What amount of impairment loss, if any, should ACME record? (Enter your answer in millions rounded to 1 decimal place.)
Business
1 answer:
alekssr [168]3 years ago
6 0

Answer:

ACME Drilling should record impairment loss of $6.9 million

Explanation:

According to GAAP, when the fair value of an asset is below the net carrying amount of that asset ( Asset's historical cost - Asset's accumulated depreciation or the net book value of the asset), the Company should record it as asset impairment loss.

In ACME's case, the net book value is $18.6 million while the estimated fair value is only $11.7 million meaning that the platform is actually worth less than it is recorded on ACME's book. Thus, an impairment loss of $6.9 million should be recorded ( $18.6 million - $11.7 million) to realize the fair value of the oil-drilling platform.

The sum of projected sum of future cash flows in this case is not suitable to be used to determine the oil-drilling platform because it has not been discounted to the present value amount, and also, it is not appropriate under GAAP.

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Macroeconomics is important because it allows the public to understand the economy as a whole, fiscal policy and global economic policy.
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osie Dry Cleaning was started on January 1, Year 1. It experienced the following events during its first two years of operation:
neonofarm [45]

Answer:

The Bad Debt expense will be in year 1;

Explanation:

The Bad Debt Expense         $45,000*1%=$450

The journal entry will be

Bad Debt Expense     Dr.$450

Account Receivable  Cr.$450

6 0
3 years ago
Item 13 assume markup percentage equals desired profit divided by total costs. what is the correct calculation to determine the
xz_007 [3.2K]

The calculation to determine the dollar amount of the markup per unit: Total cost per unit times markup percentage per unit.

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8 0
2 years ago
Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings, hence it does not pay dividends. H
12345 [234]

Answer:

Di = dividend in year i

D0 = D1 = D2 = 0

D3 = 2

D4 = D3 * (1+24%) = 2.48

D5 = D4 * (1+24%) = 3.0752

D6 = D5 * (1+7%) = 3.290464

require return r = 14%

g = 7% in the long run

So stock price in year 5 = D6/(r-g) = 3.290464/(14%-7%) = 47.0066

Current price = Present value of dividends and stock

= D1/(1+r) + D2/(1+r)^2 + D3/(1+r)^3 + D4/(1+r)^4 + D5/(1+r)^5 + Price in year 5/(1+r)^5

= 0 + 0 + 2/(1+14%)^3 + 2.48/(1+14%)^4 + 3.0752/(1+14%)^5 + 47.0066/(1+14%)^5

= 28.829219

= 28.83 (rounded to 2 decimals)

Explanation:

5 0
3 years ago
Read 2 more answers
During 2019, Montoya (age 15) received $2,350 from a corporate bond. He also received $750 from a savings account established fo
Ksenya-84 [330]

Answer:

Montoya's taxable income = $2050

Explanation:

given data

received corporate bond = $2,350

received savings account = $750

to find out

Montoya's taxable income

solution

first we get here interest income that is

interest income = received corporate bond  + received corporate bond

interest income = $2350 + $750

interest income = $3100

and we know that here standard deduction for dependent person tax return is = $1050

so here  Montoya's taxable income will be

Montoya's taxable income = $3100 - $1050

Montoya's taxable income = $2050

6 0
3 years ago
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