Question

In: Accounting

What would be the adjustment to be done in the accounting books for this asset at year end?

A machine which was acquired three years ago for 78000€ and which an updated accumulated depreciation of 23400€ has an estimated value in use of 52500€ while its fair value less costs to sell is 55.000€. What would be the adjustment to be done in the accounting books for this asset at year end?

 

  1. The company should record an impairment loss of 400€
  2. The company should record an impairment loss of 2500€
  3. The company should not record any adjustment for impairment.
    1. The company should record an impairment loss of 2100€.

Solutions

Expert Solution

The correct answer has been selected from the options provided as per the calculations shown below:

Book Value = $ 78,000 - $ 23,400 = $ 54,600
 
Net Usage Value = $ 52,500
 
Impairment Value = 52,500 - 54,600 = $ 2,100
 
Option D : The company should record an impairment loss of 2100€.

Impairment Loss: 2100

Soumik Mallick Choudhury answered 2 years ago
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