Jurassic Company owns machinery that cost $2,172,600 and has accumulated depreci

Question

Jurassic Company owns machinery that cost $2,172,600 and has accumulated depreciation of $917,320. The expected future net cash flows from the use of the asset are expected to be $1,207,000. The fair value of the machinery is $965,600. 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 or Credit

Explanation / Answer

Answer:

Loss on Impairment. .................................................. 289680

           To Accumulated Depreciation—Machinery A/C. .............                       289680

Note: The asset fails the recoverability test ($1,207,000 < $1,255280)

Cost 2172600 Less: Accumulated dep 917320 Carrying amount 1255280 Less: Fair value 965600 Loss on impairment 289680

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