Adam, Inc. purchased equipment in 2021 at a cost of $600,000. Two years later it became apparent to Adam, Inc. that this equipment had suffered an impairment of value. In early 2023, the book value of the asset was $510,000 and it is estimated that the fair value or market value is now $465,000. The entry to record the impairment is... O a. No entry is necessary asp write-off violates the historical cost principle O b. Debit Accumulated depreciation 90,000 and credit Reserve for Loss on Impairment of Equipment 90,000 O c. Debit Loss on Impairment of Equipment 70,000 and credit Accumulated Depreciation-Equipment 70,000 O d. Debit Loss on impairment of Equipment 45,000 and credit Accumulated Depreciation-Equipment 45,000

Adam, Inc. purchased equipment in 2021 at a cost of $600,000. Two years later it became apparent to Adam, Inc. that this equipment had suffered an impairment of value. In early 2023, the book value of the asset was $510,000 and it is estimated that the fair value or market value is now $465,000. The entry to record the impairment is... O a. No entry is necessary asp write-off violates the historical cost principle O b. Debit Accumulated depreciation 90,000 and credit Reserve for Loss on Impairment of Equipment 90,000 O c. Debit Loss on Impairment of Equipment 70,000 and credit Accumulated Depreciation-Equipment 70,000 O d. Debit Loss on impairment of Equipment 45,000 and credit Accumulated Depreciation-Equipment 45,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Mawn Company bought and and built a warehouse during 2019. It improperly debited the following related costs to an account titled Land and Buildings: Prepare the correcting entries on December 31, 2019, to properly reclassify the preceding items.
Johnson Company purchased an equipment at P6,500,000 on January 1, 2020 which will be used for a total of 10 years, no salvage value. Johnson accounted for this equipment using the revaluation model. The value in use of the assets during the three revaluation dates were P5,556,000, P4,413,000 and P4,240,000 on December 31, 2020; 2021; and 2022. While the fair values are P5,500,000, P4,620,000; and P4,770,000; respectively for 2020, 2021 and 2022 with cost to sell of P100,000; P120,000; and P110,000, respectively. How much is the income (expense) recognized in 2020? How much is the income (expense) recognized in 2021? How much is the income (expense) recognized in 2022?
In 2019, A.M.E. Corporation's accountant incorrectly expensed the cost of a major repairs to one of its equipment. The repairs would prolong the life of the asset beyond its current estimated useful life. Which of the following is (are) true? Question 18 options: Income in 2019 is understated. Income in future years is overstated. Corporation's assets in 2019 will be understated. All of these answer choices are true
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
The Laura Company has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed. a. In 2020, fully depreciated equipment (with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment. b. On January 1, 2019, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. (Ignore depreciation.) Required: Prepare journal entries to correct these errors at December 31, 2020. Ignore income taxes.
On December 31, 2022, Delater Enterprises must measure its impairment loss for plant and equipment. Delater has determined that the broadcast license is not impaired. The projected future undiscounted cash flows, projected future discounted cash flows, and fair values of the plant and equipment are listed below: (Click the icon to view the cash flows and fair values.) Determine the impairment loss and the revised annual depreciation expense. Prepare any necessary journal entries to record the impairment. Begin by computing the impairment loss for the plant and equipment. (Use a minus sign or par Plant and Equipment Carrying value Less: Fair value Impairment Loss Next, prepare the journal entry necessary to record the impairment. (Record debits first, then c December 31, 2022 2,145,000 915,000 $ (2,145,000) 1,230,000 $ (915,000) Account Accumulated Depreciation Plant and Equipment Impairment Loss on Plant and Equipment Plant and Equipment Determine the revised annual depreciation…
Wildhorse, Inc. purchased equipment in 2024 for $901000. Two years later it became apparent to Wildhorse that this equipment had suffered an impairment of value. In early 2026, the book value of the asset is $585000 and it is estimated that the fair value is now only $359000. The entry to record the loss on impairment is O No entry is necessary as a write-off violates the historical cost principle. Retained Earnings 226000 Reserve for Loss on Impairment. Loss on Impairment Accumulated Depreciation-Equipment Retained Earnings Accumulated Depreciation-Equipment 226000 226000 226000 226000 226000
Please, not answered with the same person ABC Company obtained a patent in January 2019, at a cost of $ 200.000 Estimated useful life 8 year. The company incurred additional costs related to this patent in January 2020, amounting to $ 20.000 At the end of 2021 there was an economic downturn due to the pandemic, and a test for impairment of the fair value of in assets was carried out according to an independent appraiser, the recoverable value of the patent is $ 24,000. Instructions: Make journals at the end of 2019 to 2021
On December 31, 2019, Aquinas Company had equipment that had a carrying amount of $300,000 which the company wrote down to its $250,000 fair value. At the end of 2020 it was determined that the fair value of the equipment had risen to $320,000. At December 31, 2020, assuming Aquinas does not intend to dispose of the equipment, how should Aquinas record the change in fair value of the equipment? A. The carrying amount of the equipment should not change except for the depreciation taken in 2020. B. The equipment should reflect the new cost basis of $300,000. C. The equipment should reflect the new cost basis of $320,000. D. The equipment should reflect the new cost basis of $270,000.