After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The equipment had cost $763,000, accumulated depreciation was $581,000, and its fair value (based on estimated future cash flows from selling the equipment) was $60,000. Required: 1. Determine whether the equipment is impaired. 2. Prepare the journal entries to record the impairment in asset if any. Complet o tabe holow
After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The equipment had cost $763,000, accumulated depreciation was $581,000, and its fair value (based on estimated future cash flows from selling the equipment) was $60,000. Required: 1. Determine whether the equipment is impaired. 2. Prepare the journal entries to record the impairment in asset if any. Complet o tabe holow
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The
equipment had cost $763,000, accumulated depreciation was $581,000, and its fair value (based on estimated future cash flows from
selling the equipment) was $60,000.
Required:
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1. Determine whether the equipment is impaired.
2. Prepare the journal entries to record the impairment in asset if any.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Determine whether the equipment is impaired.
The fair value is
and the book value is
This is a numeric cell, so please
enter numbers only.
X
< Required 1
Therefore this asset
Required 2 >
impaired.
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