Marston acquired assets for $100,000. At the end of year 3, the assets had accumulated depreciation of $40,000. An impairment loss was indicated, and the fair value of the assets was $48,000. The journal entry to record the impairment loss will include (Select all that apply.)

(a) - Debit to accumulated depreciation of $40,000

(b) - Debit to loss on impairment of $12,000

(c) - Credit to assets of $52,000

Question

Lailah Gaines

Business

21 January, 14:11

Marston acquired assets for $100,000. At the end of year 3, the assets had accumulated depreciation of $40,000. An impairment loss was indicated, and the fair value of the assets was $48,000. The journal entry to record the impairment loss will include (Select all that apply.)

(a) - Debit to accumulated depreciation of $40,000

(b) - Debit to loss on impairment of $12,000

(c) - Credit to assets of $52,000

+2

Answers (1)

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Preston Dalton · Answer 1

(b) - Debit to loss on impairment of $12,000

Explanation:

As for the details in question,

The asset purchase price = $100,000

Accumulated depreciation = $40,000

Thus, book value = Purchase price - Accumulated depreciation = $100,000 - $40,000 = $60,000

Now, this has a fair market value = $48,000

Thus, loss of value to be recorded as impairment loss = $60,000 - $48,000 = $12,000

Since loss in value will decrease the value of asset, it will be debited against credit in fixed assets by $12,000

This, will represent book value = $48,000

Therefore, correct option is:

Statement B