Question

Coronado Industries purchased equipment in 2019 at a cost of $912000. Two years later it became apparent to Coronado Industries that this equipment had suffered an impairment of value. In early 2021, the book value of the asset is $583000 and it is estimated that the fair value is now only $360000. The entry to record the impairment is

Answer 1

Answer and Explanation:

The journal entry to record the impairment is as follows:

Loss on impairment of equipment $223,000 ($583,000 - $360,000)

To Accumulated depreciation- Equipment $223,000

(Being the impairment is recorded)

Here the loss would be debited as it increased the losses and accumulated depreciation is credited as it decreased the assets