Question
Question 4: Impairment (8 marks) Sage Corporation's balance sheet includes the following asset: Equipment: $275,000 Accumulated depreciation: 85,000 Sage was notified of a significant change
Question 4: Impairment (8 marks)
Sage Corporation's balance sheet includes the following asset:
Equipment: $275,000
Accumulated depreciation: 85,000
Sage was notified of a significant change in the technology used to power the equipment and decided to test for impairment. Sage obtained the following data:
Future cash flows (undiscounted): $125,000
Value in use (discounted): 120,000
Fair value: 160,000
Selling costs: 8,000
Required:
Assuming Sage follows ASPE, calculate if the asset is impaired, and prepare any journal entries required. Show your calculations.
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