Crane Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10,100,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Crane's equipment. Crane's controller estimates that expected future net cash flows on the equipment will be $6,363.000 and that the fair value of the equipment is $5.656,000. Crane intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Crane uses straight-line depreciation.

Crane Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10,100,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Crane's equipment. Crane's controller estimates that expected future net cash flows on the equipment will be $6,363.000 and that the fair value of the equipment is $5.656,000. Crane intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Crane uses straight-line depreciation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Account Titles and Explanation
Debit
Credit
Loss on Impairment
1,919000
1,919000
Accumulated Depreciation-Equipment

Crane Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for
$10,100,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced
that would accelerate the obsolescence of Crane's equipment. Crane's controller estimates that expected future net cash flows on the
equipment will be $6,363,000 and that the fair value of the equipment is $5.656,000. Crane intends to continue using the equipment,
but it is estimated that the remaining useful life is 4 years. Crane uses straight-line depreciation.

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