Wildhorse, Inc. purchased equipment in 2024 for $901000. Two years later it became apparent to Wildhorse that suffered an impairment of value. In early 2026, the book value of the asset is $585000 and it is estimated that the only $359000. The entry to record the loss on impairment is O No entry is necessary as a write-off violates the historical cost principle. Retained Earnings 226000 Reserve for Loss on Impairment O Loss on Impairment Accumulated Depreciation-Equipment 226000 226000 226000

Wildhorse, Inc. purchased equipment in 2024 for $901000. Two years later it became apparent to Wildhorse that suffered an impairment of value. In early 2026, the book value of the asset is $585000 and it is estimated that the only $359000. The entry to record the loss on impairment is O No entry is necessary as a write-off violates the historical cost principle. Retained Earnings 226000 Reserve for Loss on Impairment O Loss on Impairment Accumulated Depreciation-Equipment 226000 226000 226000

Name: Wildhorse, Inc. purchased equipment in 2024 for $901000. Two years la
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Description: Wildhorse, Inc. purchased equipment in 2024 for $901000. Two years later it became apparent to Wildhorse that this equipment hadsuffered an impairment of value. In early 2026, the book value of the asset is $585000 and it is estimated that the fair

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

Wildhorse, Inc. purchased equipment in 2024 for $901000. Two years later it became apparent to Wildhorse that this equipment had
suffered an impairment of value. In early 2026, the book value of the asset is $585000 and it is estimated that the fair value is now
only $359000. The entry to record the loss on impairment is
O No entry is necessary as a write-off violates the historical cost principle.
Retained Earnings
226000
Reserve for Loss on Impairment.
Loss on Impairment
Accumulated Depreciation-Equipment
Retained Earnings
Accumulated Depreciation-Equipment
226000
226000
226000
226000
226000

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