Reference no: EM132934993
Question - Blossom Company manufactures routers used in industrial modems. On May 15, 2017, Blossom purchased a precision welding machine at a retail price of $92,400. Blossom paid 5% sales tax on this purchase and hired a contractor to build a "clean" platform enclosure for the machine for $6,900. Blossom estimates the machine will have a 5-year useful life, with a salvage value of $7,700 at the end of 5 years. Blossom uses straight-line depreciation and employs the "half-year" convention in accounting for partial-year depreciation. Blossom's fiscal year ends on December 31.
During 2019, Blossom's circuit board business is experiencing significant competition from companies with more advanced low-heat circuit boards. As a result, at June 30, 2019, Blossom conducts an impairment evaluation of the welding machine purchased in 2017. Blossom determines that undiscounted future cash flows for the machine are estimated to be $57,600 and the fair value of the machine, based on prices in the re-sale market, to be $50,000.
Required - Prepare the journal entry to record an impairment, if any, on the welding machine.
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: Blossom determines that undiscounted future cash flows for the machine are estimated to be $57,600. Prepare the journal entry to record an impairment
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