City of Appleton is located in an area subsect to volcano. On June 13,2014, the building...

 

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City of Appleton is located in an area subsect to volcano. On June 13,2014, the building which is occupied by employees was suffered several structural damage as a result of a volcano. It had been 31 years since a volcano had hit the City of Appleton area, although volcano in City of Appleton geographic area are not uncommon. The building had been purchased in 2000 at a cost of $2,000,000 and had accumulated depreciation of $500,000 as of July 2014. Based on a restoration cost analysis, city engineers estimate the impairment loss at $320,000; however, the city expects during the next fiscal year to receive insurance recoveries of $120,000 for the damage. Required: Should the estimated impairment loss be reported as an extraordinary item? As a special item? Explain. b. Record the estimated impairment loss in the journal for governmental activities at the government-wide level. City of Appleton is located in an area subsect to volcano. On June 13,2014, the building which is occupied by employees was suffered several structural damage as a result of a volcano. It had been 31 years since a volcano had hit the City of Appleton area, although volcano in City of Appleton geographic area are not uncommon. The building had been purchased in 2000 at a cost of $2,000,000 and had accumulated depreciation of $500,000 as of July 2014. Based on a restoration cost analysis, city engineers estimate the impairment loss at $320,000; however, the city expects during the next fiscal year to receive insurance recoveries of $120,000 for the damage. Required: Should the estimated impairment loss be reported as an extraordinary item? As a special item? Explain. b. Record the estimated impairment loss in the journal for governmental activities at the government-wide level.

Answer rating: 100% (QA)

When the carrying value of an asset exceeds its recoverable value an impairment loss is recorded The ... View the full answer