Penang Corporation is a public company that purchased some equipment on January 1, 2010, for $850,000. It

Question:

Penang Corporation is a public company that purchased some equipment on January 1, 2010, for $850,000. It had an estimated useful life of eight years and a $50,000 residual value. Penang uses straight-line depreciation and has a December 31 year end. At December 31, 2012, management tested the asset for impairment. The equipment's recoverable amount was $320,000.

Instructions

(a) Calculate the equipment's carrying amount at December 31, 2012.

(b) Record the impairment loss.

(d) Assuming that the equipment is used throughout 2013, what would the depreciation expense be for that year?

(e) At the end of 2013, could the impairment loss be reversed? Would the amount of the reversal be exactly equal to the Residual Value answer in (b) above? If not, what would it be?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...