La Mancha Enterprises completed all of its March 31, 2014, adjustments in preparation for compiling its financial statements, which resulted in the following trial balance.

Account...................Balance

Accounts payable .......................................................... $14,750

Accounts receivable......................................................... 57,500

Accumulated depreciation, computer equipment .......... 40,250

Accumulated depreciation, machinery.......................... 152,500

Accumulated depreciation, warehouse ......................... 286,500

Allowance for doubtful accounts...................................... 6,000

Cash ................................................................................. 35,000

Computer equipment ....................................................... 72,500

Expenses, including cost of goods sold....................... 1,246,750

Joy La Mancha, capital................................................... 407,875

Land................................................................................. 145,000

Machinery ...................................................................... 241,250

Mortgage payable ............................................................. 93,750

Office supplies..................................................................... 4,875

Revenues........................................................................ 1,227,500

Salaries payable.................................................................. 33,750

Warehouse........................................................................ 460,000

Other information:

1. All accounts have normal balances.

2. $34,200 of the mortgage balance is due beyond March 31, 2015.

The final task in the year-end process was to assess the assets for impairment, which resulted in the following schedule.

Asset.............Recoverable Value

Computer equipment ........................................... $6,250

Land........................................................................ 172,500

Machinery ............................................................... 65,000

Warehouse ............................................................ 243,750

Required

1. Prepare the entry (entries) to record any impairment losses at March 31, 2014. Assume the company recorded no impairment losses in previous years.

2. Prepare a classified balance sheet at March 31, 2014.

Analysis Component: How does the recording of an impairment loss affect equity, if at all?