What accounting issues did management face in accounting

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Reference no: EM133344264

Case Study: The management of Giro Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $1,000,000 with depreciation to date of $500,000 as of December 31, 2010. On December 31, 2010 management projected the present value of future net cash flows from this equipment to be $350,000 and its fair value less cost of disposal to be $300,000. The company intends to use this equipment in the future. The remaining useful life of the equipment is 4 years.

Questions: |. Prepare the journal entry (if any) to record the impairment at December 31, 2010.

Where should the gain or loss (if any) on the write-down be reported on the income-statement?

At December 31, 2011, the equipment's recoverable amount is $295,000. Prepare the journal entry (if any).

What accounting issues did management face in accounting for this impairment?

Reference no: EM133344264

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