Question

arston acquired assets for $100,000. At the end of year 3, the assets had accumulated depreciation of $40,000. An impairment loss was indicated, and the fair value of the assets was $48,000. The journal entry to record the impairment loss will include

Answer 1

Kindly see Explanation

Step-by-step explanation:

JOURNAL ENTRY :

Asset worth = $100,000

Accumulated Depreciation = $40,000

Fair value of asset due to loss impairment = $48,000

Asset ($100,000 - $48,000) - - - $52,000 Cr.

Accumulated Depreciation - - - $40,000 Dr.

Impairment loss - - - - - - - - - - - - $12,000 Dr.

Impairment loss = (Asset value - Depreciation - fair value)

Impairment loss = ($100,000 - $40,000 - $48,000)

$60,000 - $48,000 = $12000