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On July 1, 2015, Karen Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was $40,000. Straight-line depreciation is used. On July 1, 2019, economic factors cause the market value of the equipment to decrease to $90,000. On this date, Karen evaluates if the equipment is impaired and estimates future cash flows relating to the use and disposal of the equipment to be $195,000. a. Is the equipment impaired at July 1, 2019? b. If the equipment is impaired at July 1, 2019, calculate the amount of the impairment loss. Impairment loss = $ c. If the equipment is impaired at July 1, 2019, prepare the journal entry to record the impairment loss. General Journal Debit Credit July 1 To record impairment loss on equipment.

On July 1, 2015, Karen Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was $40,000. Straight-line depreciation is used. On July 1, 2019, economic factors cause the market value of the equipment to decrease to $90,000. On this date, Karen evaluates if the equipment is impaired and estimates future cash flows relating to the use and disposal of the equipment to be $195,000. a. Is the equipment impaired at July 1, 2019? b. If the equipment is impaired at July 1, 2019, calculate the amount of the impairment loss. Impairment loss = $ c. If the equipment is impaired at July 1, 2019, prepare the journal entry to record the impairment loss. General Journal Debit Credit July 1 To record impairment loss on equipment.

Intermediate Accounting: Reporting And Analysis
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
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...
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On July 1, 2015, Karen Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was $40,000. Straight-line depreciation is used. On July 1, 2019, economic factors cause the market value of the equipment to decrease to $90,000. On this date, Karen evaluates if the equipment is impaired and estimates future cash flows relating to the use and disposal of the equipment to be $195,000. a. Is the equipment impaired at July 1, 2019? b. If the equipment is impaired at July 1, 2019, calculate the amount of the impairment loss. Impairment loss = $ c. If the equipment is impaired at July 1, 2019, prepare the journal entry to record the impairment loss. General Journal Debit Credit July 1 To record impairment loss on equipment.
Transcribed Image Text:On July 1, 2015, Karen Company purchased equipment for $325,000; the estimated useful life was 10 years and the expected salvage value was $40,000. Straight-line depreciation is used. On July 1, 2019, economic factors cause the market value of the equipment to decrease to $90,000. On this date, Karen evaluates if the equipment is impaired and estimates future cash flows relating to the use and disposal of the equipment to be $195,000. a. Is the equipment impaired at July 1, 2019? b. If the equipment is impaired at July 1, 2019, calculate the amount of the impairment loss. Impairment loss = $ c. If the equipment is impaired at July 1, 2019, prepare the journal entry to record the impairment loss. General Journal Debit Credit July 1 To record impairment loss on equipment.
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