Question
Hoksi Corporation purchased equipment for $725,000 in 2025. Two years later, the equipment has accumulated depreciation of $225,000 and Hoksi has concerns that the equipment
Hoksi Corporation purchased equipment for $725,000 in 2025. Two years later, the equipment has accumulated depreciation of $225,000 and Hoksi has concerns that the equipment has been impaired. Future cash flows are estimated to be $480,000. The controller believes the current fair value of the equipment to be approximately $425,000. The journal entry to record the impairment loss on the equipment will include
Hoksi Corporation purchased equipment for $725,000 in 2025. Two years later, the equipment has accumulated depreciation of $225,000 and Hoksi has concerns that the equipment has been impaired. Future cash flows are estimated to be $480,000. The controller believes the current fair value of the equipment to be approximately $425,000. The journal entry to record the impairment loss on the equipment will include
A. credit to Loss on Impairment for $75,000.
B. no impairment has occurred, so no journal entry is required.
C. credit to Accumulated Depreciation Equipment for $75,000.
D. credit to Accumulated Depreciation Equipment for $20,000.
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Managerial Accounting An Introduction to Concepts Methods and Uses
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil
11th edition
1111571260, 978-1111571269
