California Spas Recently Learned That the Value of Its Building

question 245

Multiple Choice

California Spas recently learned that the value of its building required a write-down because of the discovery that it was on an earthquake fault line.The building cost $2,000,000 and has a book value of $1,570,000 before the discovery and the fair value was $975,000 after the discovery.Which of the following journal entries will be used to record the asset impairment?

• A)Debit Impairment Loss and credit Accumulated Depreciation for $595,000
• B)Debit Depreciation Expense and credit Building for $595,000
• C)Debit Accumulated Depreciation and credit Building for $430,000
• D)Debit Impairment Loss and credit Accumulated Depreciation for $430,000

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