Question

ABC corp has decided to evaluate a piece of equipment for impairment on Jan. 1, 2018 (fiscal year ending Dec. 31). ABC corp purchased the equipment on Jan. 1, 2016 for $260,000 and has used straight line depreciation method. The equipment has a residual value of $20,000 and a six year useful life. The estimated undercounted future cash flows from the machine are $150,000. ABC corp uses a 10% discount rate. The estimated fair value is $132,000.

Present the steps ABC corp should undertake to evaluate for impairment and record any journal entry or "no entry" if none required. (use US GAAP).

Answer 1

The detailed answer is attached below.

Summary : Impairment loss = $30,000

Thanks

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