Tuesday, 8 December 2020

Collison and Ryder Company (C&R) has been experiencing declining market conditions for its sportswear division. Management decided to test the assets of the division for possible impairment.

 Collison and Ryder Company (C&R) has been experiencing declining market conditions for its sportswear division. Management decided to test the assets of the division for possible impairment. The test revealed the following: book value of division’s assets, $26.5 million; fair value of division’s assets, $21 million; undiscounted sum of estimated future cash flows generated from the division’s assets, $28 million.
 
What amount of impairment loss should C&R recognize

 


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