Reference no: EM132961997

On Jan 1, 2016, Holloway Inc. purchased equipment for $840,000, and, at Dec 31, 2016, recorded straight-line depreciation based on a twenty-year life with $20,000 residual value. Holloway tests its property, plant and equipment annually for impairment and at Dec 31, 2017, determined that the recoverable amount of this equipment was $722,000.

Problem 1: Determine the carrying amount of the equipment at December 31, 2017 assuming that depreciation has already been recorded for the year.

Problem 2: Determine the impairment loss (if any) and record the appropriate journal (if any) entry at December 31, 2017.

Problem 3: Calculate the 2018 annual depreciation expense subsequent to the impairment loss and record the appropriate journal entry.