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Requirements a. Prepare the journal entry required to record the impairment loss. b. Assuming that Lewad's uses the straight-line method with no residual value, prepare the journal entry to record the revised depreciation expense for the first year immediately following the impairment. c. Assume that 2 years following the impairment write-down, the fair value of the asset falls to $729,000. The sum of the undiscounted future cash flows is $755,000. What is the carrying value of the asset at this time? Prepare any journal entry necessary to reflect the change in fair value Print Done - x Lewad's Domino Manufacturing Company learned that one of its cutting machines is obsolete. Although the company will continue to use this machinery in the future, management believes that an impairment write-down is required. The following information relates to the cutting machine: (Cick the icon to view the information.) The firm estimates that the machine has a useful life of 9 years and it has used it for 4 years. It has no salvage value. Read the requirements. Requirement a. Prepare the journal entry required to record the impairment loss. (Record debits first Account Date of Impairment Impairment Loss on Cutting Machine Data table Requirement b. Assuming that Lewad's uses the straight-line method with no residual value, prepare impairment Account Subsequent Year I Description Cutting Machine Cost $ 3,228,000 Accumulated depreciation (up to the date of the impairment test) $ 1,284,000 Total estimated future cash flows $ 1,236,000 Total discounted future cash flows $ 1,075,000 Estimated fair value Costs to sell Remaining useful life from the impairment date Print Done S S 1,044,000 7.500 5 years Requirement c. Assume that 2 years following the impairment write-down, the fair value of the asset falls to $729,000. The sum of the undiscounted future cash flows is $755,000. What is the carrying value of the asset at this time? Prepare any journal entry necessary to reflect the change in fair value

Requirements a. Prepare the journal entry required to record the impairment loss. b. Assuming that Lewad's uses the straight-line method with no residual value, prepare the journal entry to record the revised depreciation expense for the first year immediately following the impairment. c. Assume that 2 years following the impairment write-down, the fair value of the asset falls to $729,000. The sum of the undiscounted future cash flows is $755,000. What is the carrying value of the asset at this time? Prepare any journal entry necessary to reflect the change in fair value Print Done - x Lewad's Domino Manufacturing Company learned that one of its cutting machines is obsolete. Although the company will continue to use this machinery in the future, management believes that an impairment write-down is required. The following information relates to the cutting machine: (Cick the icon to view the information.) The firm estimates that the machine has a useful life of 9 years and it has used it for 4 years. It has no salvage value. Read the requirements. Requirement a. Prepare the journal entry required to record the impairment loss. (Record debits first Account Date of Impairment Impairment Loss on Cutting Machine Data table Requirement b. Assuming that Lewad's uses the straight-line method with no residual value, prepare impairment Account Subsequent Year I Description Cutting Machine Cost $ 3,228,000 Accumulated depreciation (up to the date of the impairment test) $ 1,284,000 Total estimated future cash flows $ 1,236,000 Total discounted future cash flows $ 1,075,000 Estimated fair value Costs to sell Remaining useful life from the impairment date Print Done S S 1,044,000 7.500 5 years Requirement c. Assume that 2 years following the impairment write-down, the fair value of the asset falls to $729,000. The sum of the undiscounted future cash flows is $755,000. What is the carrying value of the asset at this time? Prepare any journal entry necessary to reflect the change in fair value

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Requirements a. Prepare the journal entry required to record the impairment loss. b. Assuming that Lewad's uses the straight-line method with no residual value, prepare the journal entry to record the revised depreciation expense for the first year immediately following the impairment. c. Assume that 2 years following the impairment write-down, the fair value of the asset falls to $729,000. The sum of the undiscounted future cash flows is $755,000. What is the carrying value of the asset at this time? Prepare any journal entry necessary to reflect the change in fair value Print Done - x
Transcribed Image Text:Requirements a. Prepare the journal entry required to record the impairment loss. b. Assuming that Lewad's uses the straight-line method with no residual value, prepare the journal entry to record the revised depreciation expense for the first year immediately following the impairment. c. Assume that 2 years following the impairment write-down, the fair value of the asset falls to $729,000. The sum of the undiscounted future cash flows is $755,000. What is the carrying value of the asset at this time? Prepare any journal entry necessary to reflect the change in fair value Print Done - x
Lewad's Domino Manufacturing Company learned that one of its cutting machines is obsolete. Although the company will continue to use this machinery in the future, management believes that an impairment write-down is required. The following information relates to the cutting machine: (Cick the icon to view the information.) The firm estimates that the machine has a useful life of 9 years and it has used it for 4 years. It has no salvage value. Read the requirements. Requirement a. Prepare the journal entry required to record the impairment loss. (Record debits first Account Date of Impairment Impairment Loss on Cutting Machine Data table Requirement b. Assuming that Lewad's uses the straight-line method with no residual value, prepare impairment Account Subsequent Year I Description Cutting Machine Cost $ 3,228,000 Accumulated depreciation (up to the date of the impairment test) $ 1,284,000 Total estimated future cash flows $ 1,236,000 Total discounted future cash flows $ 1,075,000 Estimated fair value Costs to sell Remaining useful life from the impairment date Print Done S S 1,044,000 7.500 5 years Requirement c. Assume that 2 years following the impairment write-down, the fair value of the asset falls to $729,000. The sum of the undiscounted future cash flows is $755,000. What is the carrying value of the asset at this time? Prepare any journal entry necessary to reflect the change in fair value
Transcribed Image Text:Lewad's Domino Manufacturing Company learned that one of its cutting machines is obsolete. Although the company will continue to use this machinery in the future, management believes that an impairment write-down is required. The following information relates to the cutting machine: (Cick the icon to view the information.) The firm estimates that the machine has a useful life of 9 years and it has used it for 4 years. It has no salvage value. Read the requirements. Requirement a. Prepare the journal entry required to record the impairment loss. (Record debits first Account Date of Impairment Impairment Loss on Cutting Machine Data table Requirement b. Assuming that Lewad's uses the straight-line method with no residual value, prepare impairment Account Subsequent Year I Description Cutting Machine Cost $ 3,228,000 Accumulated depreciation (up to the date of the impairment test) $ 1,284,000 Total estimated future cash flows $ 1,236,000 Total discounted future cash flows $ 1,075,000 Estimated fair value Costs to sell Remaining useful life from the impairment date Print Done S S 1,044,000 7.500 5 years Requirement c. Assume that 2 years following the impairment write-down, the fair value of the asset falls to $729,000. The sum of the undiscounted future cash flows is $755,000. What is the carrying value of the asset at this time? Prepare any journal entry necessary to reflect the change in fair value
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