Sunland, Inc. purchased equipment in 2024 for $887000. Two years later it became apparent to Sunland that this equipment had suffered an impairment of value. In early 2026, the book value of the asset is $586000 and it is estimated that the fair value is now only $359000. The entry to record the loss on impairment is Loss on Impairment O Accumulated Depreciation-Equipment O No entry is necessary as a write-off violates the historical cost principle. Retained Earnings 227000 Reserve for Loss on Impairment Retained Earnings 227000 Accumulated Depreciation-Equipment 227000 227000 227000 227000

Sunland, Inc: purchased equipment in 2024 for $887000. Two years later it became apparent to Sunland that this equipment had suffered an impairment of value. In early 2026 , the book value of the asset is $586000 and it is estimated that the fair value is now only $359000. The entry to record the loss on impairment is Loss on impairment 227000 Accumulated Depreciation-Equipment 227000 No entry is necessary as a write-off violates the historical cost principle. Retained Earnings Reserve for Loss on impairment 227000 227000 Retained Earnings 227000 Accumulated Depreciation-Equipment 227000