Solution-Determine the amount of impairment loss

Determine the amount of impairment loss

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Question - WildhorseEnterprises, Inc. operates several stores throughout the western United States. As part of an operational and financial reporting review in a response to a downturn in its markets, the company's management has decided to perform an impairment test on five stores (combined). The five stores' sales have declined due to aging facilities and competition from a rival that opened new stores in the same markets. Management has developed the following information concerning the five stores as of the end of fiscal 2019.

Original cost $39,340,000.

Accumulated depreciation $9,890,000.

Estimated remaining useful life 4 years.

Estimated expected future annual cash flows (not discounted) $3,600,000 per year.

Appropriate discount rate 6 percent.

Determine the amount of impairment loss, assume that (1) the estimated remaining useful life is 10 years, (2) the estimated annual cash flows are $3,068,570 per year, and (3) the appropriate discount rate is 7 percent.

Reference no: EM132609658

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Determine the amount of impairment loss

Reference no: EM132609658

Reference no: EM132609658

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