Team A - Week 4 - problem E11-18

Team A - Week 4 - problem E11-18 - The gain or loss on...

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E11-18 (Impairment) The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a of $900,000 with depreciation to date of $400,000 as of December 31, 2007. On December 31, 2007, m projected its future net cash flows from this equipment to be $300,000 and its fair value to be $230,000. The company intends to use this equipment in the future. Instructions (a) Prepare the journal entry (if any) to record the impairment at December 31, 2007. Loss on Impairment 270,000      Accumulated Depreciation (Equipment ) 270,000 (b) Where should the gain or loss (if any) on the write-down be reported in the income statement?
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Unformatted text preview: The gain or loss on impairment should be reported in the "other income or expense" section of the in (c) At December 31, 2008, the equipments fair value increased to $260,000. Prepare the journal entry ( This is a restoration of impairment loss and is not allowed. The value has increasedbut will not be (d) What accounting issues did management face in accounting for this impairment? Management faced issues relating to determining of impairment loss has occurred and to determine a cost management income statement. (if any) to record this increase in fair value. recorded. the amount of that impariment loss....
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Team A - Week 4 - problem E11-18 - The gain or loss on...

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