Chp 8 ACG - Impairment loss = net book value fair value of...

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CHAPTER 8 Slide 15 Year 1 journal entry Depreciation expense 20,000 Accumulated depreciation 20,000 Balance sheet presentation Ground equipment 62,500 Less: accumulated depreciation (20,000) 42,500 Year 2 journal entry Depreciation expense 20,000 Accumulated depreciation 20,000 Balance sheet presentation Ground equipment 62,500 Less: accumulated depreciation (40,000) 22,500 Slide 40 Depreciation expense per year: ($60,000,000 - $3,000,000) ÷ $2,850,000 At the end of year 4: Cost $60,000,000 Less: accumulated depreciation 11,400,000 Net book value 48,600,000
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Measuring Asset Impairment A productive asset is impaired if: Net book value > estimated future cash flows from the asset
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Unformatted text preview: Impairment loss = net book value fair value of the asset Under GAAP, the asset must be written down to its fair value: Impairment loss XXX Asset XXX (XXX = net book value fair value) M8-7 a. Impairment loss 7,000 Machine 7,000 b. Not impaired c. Impairment loss 32,000 Factory building 32,000 d. Not impaired Fixed Asset Turnover Net Sales Average Net Fixed Assets Publix Super Markets (in thousands): 21,654,774 (3,047,881 + 3,099,322)/2 = 7.05 ConcoPhillips (in millions): 183,650 (54,669 + 86,201)/2 = 2.61...
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Chp 8 ACG - Impairment loss = net book value fair value of...

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