on january 1 2003 the vallahara company purchased machinery fo 253509

On January 1, 2003, the Vallahara Company purchased machinery for $650,000 which it installed in a rented factory. It is depreciating the machinery over 12 years by the straight-line method to a residual value of $50,000. Late in 2007, because of increasing competition in the industry, the company believes that its asset may be impaired and will have a remaining useful life of five years, over which it estimates the asset will produce total cash inflows of $1,000,000 and will incur total cash outflows of $825,000. The cash flows are independent of the company’s other activities and will occur evenly each year. The company is not able to determine the fair value based on a current selling price of the machinery. The company’s discount rate is 10%.


1. Prepare schedules to determine whether, at the end of 2007, the machinery is impaired and, if so, the impairment loss to be recognized.

2. If the machinery is impaired, prepare the journal entry to record the impairment.

Related Articles

armstrong helmet company 239138

Armstrong Helmet Company manufactures a unique model of bicycle helmet Question Case project Learning Objectives: Prepare practical applications of course concepts Develop analytical and critical thinking Develop decision-making capabilities Enhance professional...

read more

Open chat
Need help? We are Online 24/7
Hello 👋
Can we help you?