Question

M9-8 Recording Asset Impairment Losses [LO 9-4, LO 9-5] After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The equlpment had cost $750,000, accumulated depreciation was $550,000, and its fair value (based on estimated future cash flows from selling the equlpment) was $50,000. 1. Determine whether the equipment is Impaired 2. Prepare the journal entries to record the Impaired asset Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine whether the equipment is impaired. The fair value is and the book value is Therefore this asset impaired o d Required 2

Answer 1

	The fair value is $50000 and the book value is $200000. Therefore the asset is impaired.
a	Cost of Equipment	$750,000
b	Accumulated Depreciation	$550,000
c	Book Value of equipment	$200,000
d	Fair Value (based on estimated future cash flows from selling the equipment)	$ 50,000
e	Impairment Loss (c-d)	$150,000
2	Journal entries
Date	Particulars		L.F	Debit	Credit
a.	Accumulated Depreciation		Dr.	$ 550,000
	Equipment				$ 550,000
	(To remove accumulated depreciation on equipment)
b.	Impairment Loss		Dr.	$ 150,000
	Equipment				$ 150,000
	(To record impairment loss on equipment)

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