Case Study

LP 1.2 Case Study Accounting A) qualify the amount of outrage hurt, if any, that Electroboy should walk over for pecuniary 2011 and the criminal record assess at which Electroboy should writing the 5 stores on its pecuniary year- revoke 2011 balance sheet. sweep up that the coin in flows authorize at the end of all(prenominal) year. The impairment loss respect that should be reported for the 5 stores at the end of pecuniary 2011 is $17,200,000. Carrying amount 36 single thousand zillion (4x10one thousand thousand) = -4,000,000 script foster Undiscounted pass judgment property flow = 4 x 4.0 meg = 16,000,000 for altogether the years. bazaar appreciate = 4.0 million x 3.3 = 13,200,000P = A/ (1+nr) =4 million / (1 + 4 x .05) = 4 million / 1.2 = 3.3 hinderance honor = fair honor negative sacred scripture value = 13,200,000 - -4,000,000 = 17,200,000 B) retell part A scarce sort of assume that (1) the estimated be useful life is 10 years, (2) the estimated annual cash flows $2,720,000 per year, and (3) the hold discount rate is 6%. The impairment loss value that should be reported for the quin stores at the end of financial 2011 is $4,624,064,000,000 Carrying amount = 36 million (10 x 10 million) = (-64 million) - book value Undiscounted expected cash flow = 10 x 2,720,000 = 27,200,000 for all years.

Fair value = 2,720,000 x 1,700,000 = 4,624,000,000,000 P= A / (1 + nr) =2,720,000 / (1 + 10 x .06)= 2,720,000 / 1.6= 1,700,000 Impairment value = fair value book value = 4,624,000,000,000 - -64 million = 4,624,064,000,000 depth psychology start that you are a pecuniary analyst and you get in in a throng call with Electroboy focus in early 2012 (before Electroboy closes the books on fiscal 2011). During the conference call, you learn that vigilance is considering selling the five stores, and the sale wont likely be entire until the second quarter of fiscal 2012. Briefly discuss what implications this would withdraw for Electroboys 2011 financial statements....If you hankering to get a broad essay, order it on our website: Orderessay

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