Impairement: Impairement generally means reduction in value of assset, generally fixed asset such as buildings, land, machinery and equipment and intangible assets. Impairement loss occurs when carrying value of asset increases the recoverable amount of an asset. We have to determine the journal entry to record the given transaction.

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Chapter 10, Problem 8BPSB

To determine

Impairement:

Impairement generally means reduction in value of assset, generally fixed asset such as buildings, land, machinery and equipment and intangible assets.

Impairement loss occurs when carrying value of asset increases the recoverable amount of an asset.

We have to determine the journal entry to record the given transaction.

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Joe transfers land to JH Corporation for 90% of the stock in JH Corporation worth $20,000 plus a note payable to Joe in the amount of $40,000 and the assumption by JH Corporation of a mortgage on the land in the amount of $100,000. The land, which has a basis to Joe of $70,000, is worth $160,000. a. Joe will have a recognized gain on the transfer of $90,000. b. Joe will have a recognized gain on the transfer of $30,000.c. JH Corporation will have a basis in the land transferred by Joe of $70,000. d. JH Corporation will have a basis in the land transferred by Joe of $160,000. e. None of the above.

Please provide the correct answer to this general accounting problem using accurate calculations.