Answered: Cranston Inc. reported an impairment…

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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Cranston Inc. reported an impairment loss of $200,000 on its income statement for the year ended December 31, year 3. This loss was related to long-lived assets which Cranston intended to use in its operations. On the company's December 31, year 3 balance sheet, Cranston reported these long-lived assets after impairment at $1,000,000 and as of December 31, year 3, Cranston estimated that these long-lived assets would be used for another five years. On December 31, year 4, Cranston determined that the fair values of its impaired long-lived assets had increased by $50,000 over their fair values at December 31, year 3. On the company's December 31, year 4 income statement, what amount should be reported as the gain on reversal of impairment loss?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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