HW7 - A/D to date 400,000 Carrying value 500,000 Fair value...

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(a) GAAP  1.) Recover ability test Carrying value v.s. $8,000,000  <-- larger 2.) Fail #1  Carrying value v.s. $8,000,000  Cost $9,000,000  A/D to date 1,000,000 Carrying value 8,000,000  Fair value (4,400,000) Cost of disposal 20,000 Impairment loss $3,620,000  J/E  Dec. 31, 2010 Impairment loss 3,620,000  A/D 3,620,000  (b) No journal entry. Depreciation is not taken on assets intended to be sold. (c ) Fair value $5,100,000  Cost of disposal (20,000) Cost (9,000,000) A/D to date 1,000,000  Impairment loss 3,620,000 $700,000 J/E   A/D - equipment 700,000 Recovery of impairment loss 700,000
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Undisc. Cash flow $7,000,000  Fair value $4,400,000 
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(a) GAAP  1.) Recover ability test Carrying value v.s. Undisc. Cas $500,000  <-- larger 2.) Fail #1  Carrying value v.s. Fair value $500,000  $280,000  Cost $900,000 
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Unformatted text preview: A/D to date 400,000 Carrying value 500,000 Fair value (280,000) Impairment loss $220,000 J/E Dec. 31, 2010 Impairment loss 220,000 A/D - euipment 220,000 (b) A company should report loss or gain on impairment in the &quot;Other expenses and losse It should not report it as an extrodinary item. (c ) The company may not restore an impairment loss for an asset held for use. (d) First, management uses the recoverability test which gives whether the expected futur (To measure impairment loss) If yes, then the impairment loss will be the excess of ca sh flow $300,000 es&quot; section. re net cash flows less than carrying amount. arrying amount over fair value....
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This note was uploaded on 09/27/2011 for the course MGT 131 taught by Professor ? during the Spring '11 term at San Diego.

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HW7 - A/D to date 400,000 Carrying value 500,000 Fair value...

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