Reference no: EM133088513
Question - Andrew Company purchased waste disposal equipment on January 1, 2023, for $40,000. The equipment had an estimated useful life of 10 years with no salvage value. On December 31, 2025, the company determined that the equipment may become obsolete in a few years. The company estimates that expected future net cash flows on the equipment will be $20,000 and that the fair value of the equipment is $18,000. Andrew intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Andrew uses straight-line depreciation.
Required -
(a) What is the carrying value of the asset?
(b) Prepare the journal entry (if any) to record the impairment on December 31, 2025.
(c) Prepare any journal entries for the equipment on December 31, 2026.
(d) Prepare any journal entries if the fair value of the equipment on December 31, 2026, is estimated to be $21,000.
i. Andrew is a US GAAP reporter.
ii. Andrew is an IFRS reporter.
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