Fashion House Ltd. designs, manufactures, and markets clothing products for both women and men. The company conducted an impairment test for its property and equipment at December 31, 2022, the end of its fiscal year, and determined that the property and equipment were impaired. The effects of the company's transactions related to property and equipment during 2022 and the impairment losses are reflected in the following information. Cost of property and equipment, January 1, 2022 Cost of property and equipment, December 31, 2022 Capital expenditures during the year Accumulated depreciation and impairment losses, January 1, 2022 Accumulated depreciation and impairment losses, December 31, 2022 Depreciation expense during the year Cost of property and equipment sold during the year Accumulated depreciation on property and equipment sold Cash received on property and equipment sold Dollars in Thousands $43,742 42,846 3,974 29,338 27,834 3,300 4,870 4,870 65 Required: 1. Reconstruct the journal entry for the disposal of property and equipment during the year. 2. Compute the amount of property and equipment that Fashion House Ltd. wrote down as impaired during the year. Fashion House records impairment losses as adjustments to accumulated depreciation. (Hint: Set up T-accounts.)
Fashion House Ltd. designs, manufactures, and markets clothing products for both women and men. The company conducted an impairment test for its property and equipment at December 31, 2022, the end of its fiscal year, and determined that the property and equipment were impaired. The effects of the company's transactions related to property and equipment during 2022 and the impairment losses are reflected in the following information. Cost of property and equipment, January 1, 2022 Cost of property and equipment, December 31, 2022 Capital expenditures during the year Accumulated depreciation and impairment losses, January 1, 2022 Accumulated depreciation and impairment losses, December 31, 2022 Depreciation expense during the year Cost of property and equipment sold during the year Accumulated depreciation on property and equipment sold Cash received on property and equipment sold Dollars in Thousands $43,742 42,846 3,974 29,338 27,834 3,300 4,870 4,870 65 Required: 1. Reconstruct the journal entry for the disposal of property and equipment during the year. 2. Compute the amount of property and equipment that Fashion House Ltd. wrote down as impaired during the year. Fashion House records impairment losses as adjustments to accumulated depreciation. (Hint: Set up T-accounts.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Fashion House Ltd. designs, manufactures, and markets clothing products for both women and men. The company conducted an
impairment test for its property and equipment at December 31, 2022, the end of its fiscal year, and determined that the property and
equipment were impaired. The effects of the company's transactions related to property and equipment during 2022 and the
impairment losses are reflected in the following information.
Cost of property and equipment, January 1, 2022
Cost of property and equipment, December 31, 2022
Capital expenditures during the year
Accumulated depreciation and impairment losses, January 1, 2022
Accumulated depreciation and impairment losses, December 31, 2022
Depreciation expense during the year
Cost of property and equipment sold during the year
Accumulated depreciation on property and equipment sold
Cash received on property and equipment sold
Dollars in Thousands
$43,742
42,846
3,974
29,338
27,834
3,300
4,870
4,870
65
Required:
1. Reconstruct the journal entry for the disposal of property and equipment during the year.
2. Compute the amount of property and equipment that Fashion House Ltd. wrote down as impaired during the year. Fashion House
records impairment losses as adjustments to accumulated depreciation. (Hint: Set up T-accounts.)
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