General Optic Corporation operates a manufacturing plant in Arizona. Due to a si

Question

General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: The fair value of the Arizona plant is estimated to be $19.500.000. Required: Determine the amount of impairment loss. (Enter your answer in whole dollars.) If a loss is indicated. where would it appear it General Optic's multiple-step income statement? Non-operating expenses Operating expenses If a toss is indicated. prepare the entry to record the loss. (If no entry is required for an event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

Explanation / Answer

Impirement Loss : Carrying Amount- fair value or recoverable value which ever is higher 1 Carrying Amount 49500000-15900000 =             33,600,000 Fair Value =             19,500,000 Recoverable Amount =             18,400,000 Impirement Loss : 33600000-19500000 =             14,100,000 2 Impirement loss is Non operating Expense 3 Impirment Loss A/C dr. 14,100,000 To Accumulated Impirement Loss             14,100,000

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