Reference no: EM132497924

Part 1

Provide clear, concise answers for the following:

Question 1: Define depreciation accounting.

Question 2: Does depreciation accounting provide funds? Explain.

Part 2

Whitehorse Corporation's balance sheet includes the following asset:

Equipment........................................................................................ $110,000

Less: Accumulated depreciation...................................................... (20,000)

Carrying amount (book value).......................................................... $90,000

After performing its annual review for impairment, Whitehorse obtains the following data:

Asset value in use............................................................................. $64,000

Fair value less selling costs............................................................... 67,000

Instructions

Assuming Whitehorse uses the rational entity impairment model:

Question a. Calculate the recoverable amount.

Question b. Calculate the impairment loss.

Question c. Prepare the entry to record the impairment loss.