Lamar Printing Company Determines That a Printing Press Used in Its

question 33

Multiple Choice

Lamar Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should

• A) recognize an extraordinary loss for the period.
• B) include a credit to the equipment accumulated depreciation account.
• C) include a credit to the equipment account.
• D) not be made if the equipment is still being used.

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, improving accuracy in product costing.

Overhead Cost

Expenses related to the day-to-day running of a business that are not directly linked to a specific product or service but are necessary for the business to operate.

Activity Rates

The specific costs associated with particular business activities, measured to allocate resources or assess performance.

Direct-Labor-Hours

The total hours worked by employees that are directly involved in the manufacturing process.