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When accountants recognize that an asset, such as equipment, has become impaired in value (below its historical cost minus accumulated depreciation), how is the accounting
When accountants recognize that an asset, such as equipment, has become impaired in value (below its historical cost minus accumulated depreciation), how is the accounting equation affected? 1) Net income and balance sheet assets are not affected because there is no cash expenditure related to the recognition. 2) Accumulated depreciation is debited and depreciation expense is credited. 3) Liabilities are increased to show the requirement to replace the asset. Net income is decreased. 4) Balance sheet assets are decreased and net income is decreased
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