Question
Impairment Loss On July 1, 2015, Karen Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was
Impairment Loss
On July 1, 2015, 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, 2019, 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, 2019?
b. If the equipment is impaired at July 1, 2019, calculate the amount of the impairment loss. Impairment loss = $
c. If the equipment is impaired at July 1, 2019, prepare the journal entry to record the impairment loss.
General Journal | |||
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Debit | Credit | ||
July 1 | Answer
| Answer
| Answer
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Answer | Answer
| Answer
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To record impairment loss on equipment. |
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