Reference no: EM132934588

Question - On February 15, 2020, Stark Industry sold its branch factory, which was used to Industry publicly announces that its branch factory will be closed in the end of 2020, and communicate to its customers about after-sales services, such as repairmen and maintenance service, annual vehicle inspection service, will be available and still in operation. After an announcement has been published, Stark Industry starts to give a big discounts promotion, up to 50 percent, to customers.

During 2019, Starload Company had made a vehicle purchase from Stark Industry. On February 15, 2020, the same date with Stark publicly announced to shut down its branch factory, Starload's vehicle has carrying amount $950,000  (Initial cost is of $1,000,000 and Accumulated depreciation is of $50,000).

Required -

1) Explain all indication of impairment.

2) Explain how does Starload test impairment of its vehicle.

3) Prepare the essential journal entry relating to this matter.