Impairment Loss On July 1, 2018, Karen Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was $40,000. Straight-line depreciation is used. On July 1, 2022, economic factors cause the market value of the equipment to decrease to $90,000. On this date, Karen evaluates if the equipment is impaired and estimates future cash flows relating to the use and disposal of the equipment to be $195,000. a. Is the equipment impaired at July 1, 2022? Answer b. If the equipment is impaired at July 1, 2022, calculate the amount of the impairment loss. Impairment loss = $Answer c. If the equipment is impaired at July 1, 2022, prepare the journal entry to record the impairment loss. General Journal Debit Credit July 1 Answer Answer Answer Answer Answer Answer To record impairment loss on equipment.
Impairment Loss On July 1, 2018, Karen Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was $40,000. Straight-line depreciation is used. On July 1, 2022, economic factors cause the market value of the equipment to decrease to $90,000. On this date, Karen evaluates if the equipment is impaired and estimates future cash flows relating to the use and disposal of the equipment to be $195,000. a. Is the equipment impaired at July 1, 2022? Answer b. If the equipment is impaired at July 1, 2022, calculate the amount of the impairment loss. Impairment loss = $Answer c. If the equipment is impaired at July 1, 2022, prepare the journal entry to record the impairment loss. General Journal Debit Credit July 1 Answer Answer Answer Answer Answer Answer To record impairment loss on equipment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Impairment Loss
On July 1, 2018, Karen Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was $40,000. Straight-line
a. Is the equipment impaired at July 1, 2022?
Answer
b. If the equipment is impaired at July 1, 2022, calculate the amount of the impairment loss.
Impairment loss = $Answer
c. If the equipment is impaired at July 1, 2022, prepare the
| General Journal | |||
|---|---|---|---|
| Debit | Credit | ||
| July 1 | Answer | Answer | Answer |
| Answer | Answer | Answer | |
| To record impairment loss on equipment. |
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