CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Brief Exercise 11-8 Pina Compan

Question

CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Brief Exercise 11-8 Pina Company owns equipment that cost $963,000 and has accumulated depreciation of $406,600. The expected future net cash flows from the use of the asset are expected to be $535,000. The fair value of the equipment is $428,000. Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT Question Attempts: 0 of 15 used SAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Impairment Loss = Carring value of an asset - recoverable amount

recoverable amount = fair value or future economic benefit whichever is lower
= $428,000 or $535,000
= $428,000

Impairment Loss = ($963,000 - $406,600) - $428,000
= $556,400 - $428,000
= $128,400

Accounts Titles and Explanation Debit Credit Loss on Impairment $128,400 Accumulated Depreciation $128,400

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