Question

Marston acquired assets for $100,000. At the end of year 3, the assets had accumulated depreciation of $40,000. An impairment loss was indicated, and the fair value of the assets was $48,000. The journal entry to record the impairment loss will include (Select all that apply.)

Answer 1

Answer:

(a)-debit to accumulated depreciation of $40,000

(b)-debit to loss on impairment of $12,000

(c)-credit to assets of $52,000

Explanation:

There will be a debit to accumulated depreciation to the total of $40,000 to show the accumulated depreciation so far.

There will be a debit to loss on impairment of $12,000 because the net book value after depreciation is to be $60,000 yet an impairment loss was indicated that took this value to $48,000 so then the impairment loss must be 60,000 - 48,000 which is $12,000.

The assets will be credited to the tune of $52,000 as their balance needs to be reduced by the accumulated depreciation and the impairment loss.