A Company Owns an Office Building That It Rents Out

question 13

Essay

A company owns an office building that it rents out to other businesses. Due to a downturn in the economy, rental rates have dropped while vacancy rates have increased. Due to these circumstances, the company evaluated the building for impairment. The building has a cost of $70 million, accumulated depreciation of $47.05 million, and a value in use of $20 million. In addition, the company has recently received an offer to purchase the building for $22 million. Legal and other costs necessary to complete a sale of this type would amount to $200,000.
Required:
Determine the amount of impairment, if any.

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Definitions:

Drafting

The process of creating preliminary versions of documents or drawings that will be revised and refined.

Revising

The act of modifying or altering texts to improve accuracy, coherence, and congruence with the intended message.

Planning

The process of creating strategies and outlining steps to achieve specific goals.

Planning Stage

The phase in a project or process where goals are set, strategies are developed, and tasks are outlined to achieve objectives.