At 30 June 2019, there was an indication that Modern Machineries Ltd's machinery might be impaired. In preparing for the impairment testing, the accountants have estimated, as at 30 June 2019, the piece of machinery's fair value less costs of disposal to be $495,000 and its value in use to be $580,000. The machinery was purchased and installed on 1 October 2016 by $925,000, The machinery had an accumulated depreciation of $300,000 as on 30 June 2019. Modern Machineries Ltd uses the straight-line method of depreciation for this machinery.   Required: Compute the impairment loss to be recorded at 30 June 2019?  Journalize the required entries to record the impairment loss to be recorded at 30 June 2019?

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 5MC: During 2019, White Company determined that machinery previously depreciated over a 7-year life had a...
icon
Related questions
Question

At 30 June 2019, there was an indication that Modern Machineries Ltd's machinery might be impaired. In preparing for the impairment testing, the accountants have estimated, as at 30 June 2019, the piece of machinery's fair value less costs of disposal to be $495,000 and its value in use to be $580,000. The machinery was purchased and installed on 1 October 2016 by $925,000, The machinery had an accumulated depreciation of $300,000 as on 30 June 2019. Modern Machineries Ltd uses the straight-line method of depreciation for this machinery.

 

Required:

  1. Compute the impairment loss to be recorded at 30 June 2019? 
  1. Journalize the required entries to record the impairment loss to be recorded at 30 June 2019?
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting for Property, Plant and Equipment
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L
Individual Income Taxes
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
SWFT Individual Income Taxes
SWFT Individual Income Taxes
Accounting
ISBN:
9780357391365
Author:
YOUNG
Publisher:
Cengage