Identifying and Recording Impairment Loss on Equipment Bolt Company purchased equipment on January 1,...
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Identifying and Recording Impairment Loss on Equipment
Bolt Company purchased equipment on January 1, 2018, for $68,000. This equipment has an estimated useful life of five years, a residual value of $8,000, and is depreciated using the sum-of-the-years-digits method. At the beginning of 2020, Bolt suspects that the original investment in the asset will not be realized; the total remaining future cash inflow expected to be produced through use of the equipment, including the original residual value, is $20,000. The equipments fair value at January 1, 2020, is $14,000.
a. Determine whether the asset is impaired and, if so, the amount of the impairment loss on January 1, 2020. Note: If the asset is not impaired, enter a zero (or leave blank) for the loss. Note: Do not use a negative sign with your answer.
b. Compute depreciation for 2020.
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