Question

After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The equipment had cost $746,000, accumulated depreciation was $541,000, and its fair value (based on estimated future cash flows from selling the equipment) was $45,000. 1. Determine whether the equipment is impaired. 2. Prepare the journal entries to record the impairment asset if any Complete this question by entering your answers in the tabs below. Required Required 1 Determine whether the equipment is impaired The fair and the book Therefore this asset impaired value is value is Required 1 Required 2

Answer 1

1.

Cost of equipment = $746,000

Accumulated depreciation = $541,000

Book value of equipment = Cost of equipment - Accumulated depreciation

= 746,000-541,000

= $205,000

Fair value of equipment = $45,000

Impairment loss = Book value of equipment - Fair value of equipment

= 205,000-45,000

= $160,000

2.

Journal

Date	General Journal	Debit	Credit
1	Accumulated depreciation - Equipment	$541,000
	Equipment		$541,000
2.	Impairment loss	$160,000
	Equipment		$160,000

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