The Assets of the DEF Inc On December 31^st,2014,the Fair Values of the Assets Listed Above

question 149

Essay

The assets of the DEF Inc.(a separately incorporated entity fully owned of subsidiary GHI Transport Inc.) showed the following asset carrying values on December 31^st,2014 (in millions): $$\begin{array} { l l } \text { Cash } & \$ 100 \\\text { Accounts Receivable } & \$ 20 \\\text { Inventories } & \$ 10 \\\text { Property, Plant \& Equipment (net) } & \$ 200 \\\text { Patents (net) } & \$ 20 \\\text { Goodwill } & \$ 75 \\& \\\text { Total } & \mathbf { \$ 4 2 5 }\end{array}$$ On December 31^st,2014,the fair values of the assets listed above were as follows: $$\begin{array} { l l } \text { Cash } & \$ 100 \\\text { Accounts Receivable } & \$ 15 \\\text { Inventories } & \$ 25 \\\text { Property, Plant \& Equipment (net) } & \$ 120 \\\text { Patents (net) } & \$ 60 \\\text { Total } & \$ 320\end{array}$$ Both DEF and GHI Inc.adhere to IFRS.
Required: Provide the journal entry to record the impairment loss (if any) above.

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Definitions:

Operating Assets

Assets used in the day-to-day operations of a business that are essential for generating revenue, excluding investments and non-operational assets.

Minimum Required Return

The smallest return on investment that an investor is willing to accept, considering the risk associated with the investment.

Cost Center

A department or segment within a company where costs can be allocated, but that does not directly contribute to profit, primarily used for budgeting and control purposes.

Investment Center

A business unit or division that is responsible for its own revenues, expenses, assets, and returns, and is evaluated on its profitability and efficiency in using its assets.