An equipment cost 900,000 with depreciation to date of 400,000 at December 31.2019. Management project It's present value of the future cash flow to be 300,000. An appraiser indicate the machine will likely to sell for 322,000 net of a 15% transaction fee. What is the journal entry to record impairment if any for December 31,2019.
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.
An equipment cost 900,000 with
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