Wave Crest Hotels is located in Canada, but manages an extensive network of boutique hotels in the United States.Wave Crest has significant receivables from 3 customers, $480,000 due from Stephanie Inn, $900,000 due from Warren House, and $760,000 due from Hallmark Hotels.Wave Crest has other receivables totaling $440,000.
Wave Crest determines that the Warren House receivable is impaired by $160,000 and the Hallmark Hotels receivable is impaired by $200,000.The receivable from the Stephanie Inn is not considered impaired.Wave Crest determines that a composite rate of 5% is appropriate to measure impairment on all other receivables.What is the total impairment of receivables for Wave Crest for 2011?

Question

Quizplus · Accepted Answer

- Impairment on Warren House receivable = $160,000
- Impairment on Hallmark Hotels receivable = $200,000
- Impairment on other receivables (composite rate of 5%) = $440,000 x 5% = $22,000
Total impairment of receivables = $160,000 + $200,000 + $22,000 = $382,000. Therefore, the best choice is C.

Wave Crest Hotels Is Located in Canada, but Manages an Extensive