Chapter 3
Long-Term Assets
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b) At the end of 2018, the company stopped using this machine. Since no one was interested
in buying it, the machine was simply discarded. Prepare a journal entry to record the
machine's retirement.
Date
Account Title and Explanation
Debit
Credit
c) Assume that South Company uses the double-declining-balance depreciation method
and the machine has no residual value. At the end of 2018, new technology emerged,
making the product manufactured by this machine obsolete. After testing for impairment,
South Company determines that the fair value of the machine has permanently declined
to $50. Prepare a depreciation schedule for the machine’s useful life using the following
table. Determine whether impairment has incurred, and if so, calculate the amount of
impairment loss.
Year
Net Book Value
at the beginning
of the year
Depreciation
Expense
Accumulated
Depreciation To
Date
Net Book Value
at the end of
the year
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