Reference no: EM131261501
Della Bee Company purchased a manufacturing plant building 10 years ago for $1,300,000. The building has been depreciated using the straight-line method with a 30 year useful life and 10% residual value. Della Bee's manufacturing operations have experienced significant losses for the past two years, so Della Bee has decided that the manufacturing building should be evaluated for possible impairment. Della Bee estimates that the building has a remanaing useful life of 15 years, that net cash inflow from the building will be $50,000 per year, and that the fair value of the building is $380,000 1.) Determine whether an impairment loss should be recognized. 2.) If an impairment loss should be recognized, make the appropriate journal entry. 3.) How would your answer to (1) change if the fair value of the building was $560,000?
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