Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 12.12BE
To determine
To prepare: Journal entries to record the impairment loss in the books of account.
Given information:
Asset carrying value is $905,000.
Discount rate is 8%.
Estimated fair value of asset is $720,000.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Godo
H1.
Current Attempt in Progress
Your answer is incorrect.
Vaughn Company owns equipment that cost $1.035,000 and has accumulated depreciation of $437,000. The expected future net cash
flows from the use of the asset are expected to be $625,000. The fair value of the equipment is $460,000.
Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No entry for the account titles and enter O for
the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit
entry)
Account Titles and Explanation
impair
Accumulated Depreciation Equipment
eTextbook and Media
List of Accounts
Save for Later Last saved 5 days ago
Saved work will be auto submitted on the due date. Auto-
submission can take up to 10 minutes.
Debit
138000
Credit
138000
Attempts: 1 of 4 used
Submit Answer
Chapter 12 Solutions
Intermediate Accounting
Ch. 12 - Prob. 12.1QCh. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.1MCCh. 12 - Prob. 12.2MCCh. 12 - Prob. 12.3MCCh. 12 - Prob. 12.4MCCh. 12 - Prob. 12.5MCCh. 12 - Prob. 12.6MCCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Indefinite-Life Intangible Asset Impairment....Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Impairment Reversal. IFRS. Perlu Products an IFRS...Ch. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.21BECh. 12 - Prob. 12.22BECh. 12 - Prob. 12.23BECh. 12 - Tangible Asset Impairment. Henne Optical...Ch. 12 - Tangible Asset Impairment Loss. Use the same...Ch. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Tangible Asset Impairment Loss, IFRS. Use the same...Ch. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Assets Held for Disposal. Hattie Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Asset Revaluation, Downwards, IFRS. Lousa Company...Ch. 12 - Tangible Asset Impairment. Chrispian Cookies, Inc....Ch. 12 - Prob. 12.2PCh. 12 - Tangible Asset Impairment. Using the same...Ch. 12 - Prob. 12.4PCh. 12 - Goodwill Impairment, Tangible Fixed Assets, and...Ch. 12 - Tangible Asset Impairment, Potential Reversal,...Ch. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Comprehensive Asset Revaluation Problem (Initial...Ch. 12 - Prob. 12.11PCh. 12 - Judgment Case 1: Impairments of PPE under IFRS...Ch. 12 - Prob. 2JCCh. 12 - Prob. 3JCCh. 12 - Surfing the Standards Case 1: Impairments of PPE...Ch. 12 - Prob. 2SSCCh. 12 - Financial Statement Analysis Case 1: Long-Lived...Ch. 12 - Prob. 1BCCCh. 12 - Basis for Conclusions Case 2: Intangible Assets ...Ch. 12 - Basis for Conclusions Case 3: Goodwill Impairment...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Impairment Loss On July 1 of Year 1, Okin Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was $25,000. Straight-line depreciation is used. On July 1 of Year 5, economic factors cause the market value of the equipment to decrease to $90,000. On this date, Okin 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 of Year 5?Answer b. If the equipment is impaired at July 1 of Year 5, calculate the amount of the impairment loss.Impairment loss = $Answer c. If the equippment is impaired at July 1 of Year 5, 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.arrow_forwardImpairment Basil Corporation's balance sheet includes the following asset: Equipment: $100,000 Accumulated depreciation: 20,000 Basil was notified of a significant change in demand for the product produced by the machine, and decided to test for impairment. Basil obtained the following data: Future cash flows (undiscounted): $78,000 Value in use (discounted): 73,000 Fair value: 75,000 Selling costs: 3,000 Required: Assuming Basil Corporation follows ASPE, calculate if the asset is impaired, and prepare any journal entry required. Show your calculations.arrow_forwardPlease help me with show all calculation thankuarrow_forward
- Topic: Impairment of Asset Uranus Company has various cash generating units. On December 31,2014, one cash generating unit has the following carrying amount of assets: Cash 600,000 Inventory 1,400,000 Land 2,500,000 Plant and equipment 9,000,000 Accumulated depreciation 1,500,000) Goodwill 1,000,000 Carrying amount 13,000,000 The management determined the value in use of the cash generating unit at P8,500,000. The fair value less cost of disposal for the inventory was greater than the carrying amount. Required: Prepare journal entry to recognize the impairment loss.arrow_forwardImpairment 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.arrow_forwardThe amount of the impairment loss is: question attached in ss thanks asf as asg aarrow_forward
- Staton Corporation's balance sheet includes Equipment recorded at a cost of $110,000 and accumulated depreciation of 20,000. After performing its annual review for impairment, Staton determined the following: Asset value in use $69,000 Fair value less selling costs 67,000 Undiscounted cash flows... 89,000 a Assuming Staton uses the rational entity impairment model record the appropriate entries. b Assuming Staton uses the cost recovery model calculate the impairment if any.arrow_forwardComputing Impairment of Intangible Assets Stiller Company had the following information for its three intangible assets. 1. Patent: A patent was purchased for $180,000 on June 30, 2018. Stiller estimated the useful life of the patent to be 15 years. On December 31, 2020, the estimated future cash flows attributed to the patent were $153,000. The fair value of the patent was $135,000. 2. Trademark: A trademark was purchased for $9,000 on August 31, 2019. The trademark is considered to have an indefinite life. The fair value of the trademark on December 31, 2020, is $4,500. 3. Goodwill: Stiller recorded goodwill in January 2019, related to a purchase of another company. The carrying value of goodwill is $54,000 on December 31, 2020. On December 31, 2020, the segment for which the goodwill relates had a fair value of $1,044,000. The book value of the net assets of the segment (including goodwill) is $1,080,000. Note: Round each of your answers to the nearest whole dollar. a. Classify each…arrow_forwardPresented below is information related to equipment owned by Nash Company at December 31, 2025. Cost Accumulated depreciation to date Expected future net cash flows Fair value (a) $6,270,000 Date Assume that Nash will continue to use this asset in the future. As of December 31, 2025, the equipment has a remaining useful life of 4 years and no salvage value. Your answer is partially correct. 750,000 December 4,810,000 3,320,000 Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2025. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.) Account Titles and Explanation Debit Credit Earrow_forward
- Presented below is information related to equipment owned by Sheridan Company at December 31, 2020. Cost $9,630,000 Accumulated depreciation to date 1,070,000 Expected future net cash flows 7,490,000 Fair value 5,136,000 Assume that Sheridan will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an account title to record the transaction on December 31, 2017 enter a debit amount enter a credit amount enter an account title to record the transaction on December 31, 2017 enter a debit amount enter a credit amount…arrow_forwardPlease Do not Give image Formatarrow_forwardPresented below is information related to equipment owned by Davis Company at December 31, 2020. Cost $6,750,000 Accumulated depreciation to date 750,000 Expected future net cash flows 5,250,000 Fair value 3,600,000 Assume that Davis intends to dispose of the equipment in the coming year. As of December 31, 2020, the equipment has a remaining useful life of 4 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. Prepare the journal entry (if any) to record depreciation expense for 2021. The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $3,975,000. Prepare the journal entry (if any) necessary to record this increase in fair value.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage LearningSurvey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Asset impairment explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=lWMDdtHF4ZU;License: Standard Youtube License