A Company Purchased Equipment for $800,000 and Has Depreciated It

question 13

Short Answer

A company purchased equipment for $800,000 and has depreciated it using the straight-line method for the past 5 years when its original life was estimated to be 10 years with a $200,000 residual value.The equipment's utility to the company has declined because they expect it to generate net cash flows over the remaining years of $300,000.The asset's fair value at the end of the fifth year is $200,000.If the asset has been impaired,record the journal entry to record the impairment.

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Definitions:

Filing

The process of submitting documents, typically to a government or regulatory body, in accordance with legal requirements or procedures.

SEC

The Securities and Exchange Commission, a U.S. federal agency responsible for regulating the securities industry and protecting investors.

Accounting Profession

This refers to the field involving the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations.

EDGAR

The Electronic Data Gathering, Analysis, and Retrieval system used by the U.S. Securities and Exchange Commission (SEC) for the submission of documents.