California Spas recently learned that the value of its building required a write

Question

California Spas recently learned that the value of its building required a write-down because of the discovery that it was on an earthquake fault line. The book value of the building was $1,570,000 before the discovery and the fair value was $975,000 after the discovery. Which of the following is the journal entry used to record the asset impairment?

A) Debit Impairment Loss and credit Accumulated Depreciation for $595,000

B) Debit Depreciation Expense and credit Building for $595,000

C) Debit Impairment Loss and credit Building for $595,000

D) Debit Other Gains and Losses and credit Accumulated Depreciation for $595,000

Explanation / Answer

Option B) is correct.....

Debit Depreciation Expense and

Credit Building for $595,000

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