Question
Phoenix Corp. bought a boat for $3,000,000 and has taken depreciation of $1,000,000 since its purchase. Based on recent negative evidence Phoenix believes that the
Phoenix Corp. bought a boat for $3,000,000 and has taken depreciation of $1,000,000 since its purchase. Based on recent negative evidence Phoenix believes that the boat might be impaired. Phoenix estimates that the Boat will generate future net cash flows of $1,950,000 from continuing to operate the boat over the remainder of its useful life. Phoenix has estimated the fair value of the boat to be $1,600,000 and that it would cost 3% of the estimated selling price to sell the boat.
Demonstrate that the Boat is either recoverable or not?
Assuming Seattle intends to continue to use the boat compute the amount of the impairment? _____________________________
Prepare the journal entry to record the impairment.
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