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Exercise 5-21 (Algo) Asset Impairment [LO 5-2] In the current year, the bulding occupled by Sunshine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Sunshine City area, although hurricanes in Sunshine City's geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $2.100,000 and had accumulated depreciation of $525,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the Impairment loss at $240,000, however, the city expects during the next fiscal year to recelve insurance recoverles of $125,000 for the damage. Required a Should the estimated impairment loss be reported as an extraordinary item? As a special item? OA special Item O An extraordinary Item O Ordinary expense, disclosed in the notes to the financial statements A Record the estimated Impairment loss in the journal for govemmental activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" In the first account field.) Governmental Activties Transaction General Journal Debit Credit Record the estimated impaimment loss Govemmental Actvities Buidings c How should the Insurance recovery be reported in the following fiscal year?

Exercise 5-21 (Algo) Asset Impairment [LO 5-2] In the current year, the bulding occupled by Sunshine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Sunshine City area, although hurricanes in Sunshine City's geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $2.100,000 and had accumulated depreciation of $525,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the Impairment loss at $240,000, however, the city expects during the next fiscal year to recelve insurance recoverles of $125,000 for the damage. Required a Should the estimated impairment loss be reported as an extraordinary item? As a special item? OA special Item O An extraordinary Item O Ordinary expense, disclosed in the notes to the financial statements A Record the estimated Impairment loss in the journal for govemmental activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" In the first account field.) Governmental Activties Transaction General Journal Debit Credit Record the estimated impaimment loss Govemmental Actvities Buidings c How should the Insurance recovery be reported in the following fiscal year?

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 67E
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Exercise 5-21 (Algo) Asset Impairment [LO 5-2] In the current year, the bullding occupted by Sunshine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years stnce a hurricane had hit the Sunshine City area, although huricanes In Sunshine City's geographic area are not uncommon. The bullding had been purchased 10 years earler at a cost of $2.100,000 and had accumulated depreciation of $525,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the Impairment loss at $240,000, however, the city expects durtng the next fiscal year to recelve insurance recoverles of $125,000 for the damage. Required a Should the estimated impairment loss be reported as an extraordinary tem? As a special Item? OA special Item O An extraordinary Item O Ordinary expense, disclosed in the notes to the financial statements A Record the estimated Impairment loss In the journal for govemmental activitles at the government-wide level. (If no entry is required for a transection/event, select "No Journal Entry Required" In the first account fleld.) Gevernmental Activties Transaction General Journal Debit Credit 1 Record the estmated impaiment loss Govemmental Activities Buildings C. How should the Insurance recovery be reported in the following fiscal year? O Program revenue O Service revenue
Transcribed Image Text:Exercise 5-21 (Algo) Asset Impairment [LO 5-2] In the current year, the bullding occupted by Sunshine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years stnce a hurricane had hit the Sunshine City area, although huricanes In Sunshine City's geographic area are not uncommon. The bullding had been purchased 10 years earler at a cost of $2.100,000 and had accumulated depreciation of $525,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the Impairment loss at $240,000, however, the city expects durtng the next fiscal year to recelve insurance recoverles of $125,000 for the damage. Required a Should the estimated impairment loss be reported as an extraordinary tem? As a special Item? OA special Item O An extraordinary Item O Ordinary expense, disclosed in the notes to the financial statements A Record the estimated Impairment loss In the journal for govemmental activitles at the government-wide level. (If no entry is required for a transection/event, select "No Journal Entry Required" In the first account fleld.) Gevernmental Activties Transaction General Journal Debit Credit 1 Record the estmated impaiment loss Govemmental Activities Buildings C. How should the Insurance recovery be reported in the following fiscal year? O Program revenue O Service revenue
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