The management of Petro Garcia Inc. was discussing whether certain equipment sho

Question

The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $ 1,254,600 with depreciation to date of $ 557,600 as of December 31, 2014. On December 31, 2014, management projected its future net cash flows from this equipment to be $ 418,200 and its fair value to be $ 320,620 .The company intends to use this equipment in the future. Collapse question part (a) Partially correct answer. Your answer is partially correct. Try again. Prepare the journal entry (if any) to record the impairment at December 31, 2014.(If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31

Explanation / Answer

test of impairment a carrying amount 697000 higher of c fair value 320620 d future net cash flow 418200 IF a is less than higher of c or d, impairment loss will be recorded as a is more so no impairment is to be done. So no entry is required

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