Norwel SA manufactures miniature circuit boards used in smartphones. On June 5, 2022, Norwel purchased a circuit board stamping machine at a retail price of €24,000. Norwel paid 5% sales tax on this purchase and hired a contractor to build a specially wired platform for the machine for €1,800, to meet safety requirements. Norwel estimates the machine will have a 5-year useful life, with a residual value of €2,000 at the end of 5 years. Norwel uses straight-line depreciation and employs the “half-year” convention in accounting for partial-year depreciation. Norwel’s fiscal year ends on December 31. During 2024, Norwel’s circuit board business is experiencing significant competition from companies with more advanced low-heat circuit boards. As a result, at June 30, 2024, Norwel conducts an impairment evaluation of the stamping machine purchased in 2022. Norwel determines that value-in-use for the machine is estimated to be €13,000 and the fair value of the machine less costs to sell, based on prices in the resale market, to be €13,400. Prepare the journal entry to record an impairment, if any, on the stamping machine.
Norwel SA manufactures miniature circuit boards used in smartphones. On June 5, 2022, Norwel purchased a circuit board stamping machine at a retail price of €24,000. Norwel paid 5% sales tax on this purchase and hired a contractor to build a specially
wired platform for the machine for €1,800, to meet safety requirements. Norwel estimates the machine will have a 5-year useful life, with a residual value of €2,000 at the end of 5 years. Norwel uses straight-line
During 2024, Norwel’s circuit board business is experiencing significant competition from companies with more advanced low-heat circuit boards. As a result, at June 30, 2024, Norwel conducts an impairment evaluation of the stamping machine purchased in 2022. Norwel determines that value-in-use for the machine is estimated to be €13,000 and the fair value of the machine less costs to sell, based on prices in the resale market, to be €13,400.
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