Question

The following is net asset information for the Dhillon Division of Klaus Inc.: NET ASSETS as at December 31, 2020 (in millions) Book Value Fair Value Excluding Goodwill Cash $ 52 $ 52 Accounts receivable 225 225 Property, plant, and equipment (net) 2,649 2,811 Goodwill 200 Less: Notes payable (2,645 ) (2,645 ) Net assets $ 481 The purpose of the Dhillon Division (also identified as a reporting unit or cash-generating unit) is to develop a nuclear-powered aircraft. If successful, travelling delays that are associated with refuelling could be greatly reduced, and operational efficiency would increase significantly. To date, management has not had much success and is deciding whether a writedown is appropriate at this time. Management has prepared the following estimates for the reporting unit or cash-generating unit: 1. Undiscounted future net cash flows are approximately $418 million. 2. Future value in use is approximately $478 million. 3. Sale of the unit would yield $347 million and selling costs would total $8 million.

Under ASPE, determine if there is any impairment and prepare any necessary entry on December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Enter amounts in millions.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount Show List of Accounts Link to Text Link to Text

On December 31, 2021, it is estimated that the reporting unit’s fair value has increased to $418 million. Under ASPE, prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Enter amounts in millions.) Date Account Titles and Explanation Debit Credit Dec. 31, 2021 enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount Show List of Accounts Link to Text Link to Text

Under IFRS, determine if there is any impairment and prepare any necessary entry on December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Enter amounts in millions.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount Show List of Accounts Link to Text Link to Text

On December 31, 2021, it is estimated that the cash-generating unit’s fair value has increased to $418 million. Under IFRS, prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Enter amounts in millions.) Date Account Titles and Explanation Debit Credit Dec. 31, 2021 enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount

Answer 1