• Hall, Inc. purchases an asset for $3,000,000. As of December 31, 2021, the Accumulated Depreciation on the asset is $1,200,000. Based on technological changes, Hall decides to test the asset for impairment. Estimated undiscounted future cash flows from the project are $1,500,000. The Fair Value of the asset is estimated at $982,288. The journal entry related to this asset will include: Credit to Accumulated Depreciation of $300,000. Debit to Loss of $817,712. O Debit to Loss of $851,444. O No impairment necessary.

• Hall, Inc. purchases an asset for $3,000,000. As of December 31, 2021, the Accumulated Depreciation on the asset is $1,200,000. Based on technological changes, Hall decides to test the asset for impairment. Estimated undiscounted future cash flows from the project are $1,500,000. The Fair Value of the asset is estimated at $982,288. The journal entry related to this asset will include: Credit to Accumulated Depreciation of $300,000. Debit to Loss of $817,712. O Debit to Loss of $851,444. O No impairment necessary.

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Description: • Hall, Inc. purchases an asset for $3,000,000. As of December 31, 2021, the AccumulatedDepreciation on the asset is $1,200,000. Based on technological changes, Hall decides to testthe asset for impairment. Estimated undiscounted future cash flows f

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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Concept explainers

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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Question

• Hall, Inc. purchases an asset for $3,000,000. As of December 31, 2021, the Accumulated
Depreciation on the asset is $1,200,000. Based on technological changes, Hall decides to test
the asset for impairment. Estimated undiscounted future cash flows from the project are
$1,500,000. The Fair Value of the asset is estimated at $982,288. The journal entry related to
this asset will include:
Credit to Accumulated Depreciation of $300,000.
O Debit to Loss of $817,712.
O Debit to Loss of $851,444.
O No impairment necessary.

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