Chapter 9, Problem 8ME

Recording Asset Impairment Losses

After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The equipment had cost $750,000, accumulated depreciation was $550,000, and its fair value (based on estimated future cash flows from selling the equipment) was $50,000. Determine whether the equipment is impaired and, if it is impaired, show any necessary journal entries.