Allison Company Purchased a Machine for $1,200,000 at the Beginning

question 73

Short Answer

Allison Company purchased a machine for $1,200,000 at the beginning of 2009.Allison was using the double-declining-balance (200%)method to depreciate the asset and its useful life was estimated to be 5 years with a residual value of $200,000.At the end of 2010,Allison Co.estimates the future cash flows from the asset to be equal to $500,000 and the fair value to be $450,000.What is the amount of the impairment loss?

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Definitions:

Total Assets

Total assets represent the sum of all resources owned by a company, valued in monetary terms, and listed on its balance sheet, including both current and non-current assets.

Liabilities

Financial obligations that a company owes to outside parties, including loans, accounts payable, mortgages, and other debts.

Retained Earnings

The portion of a company's profits that is saved or retained rather than distributed to shareholders as dividends.

Balance Sheet

An overview report capturing a business's financial condition, specifying its holdings, liabilities, and shareholder equity at a specific instant.