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The Andrew Company is trying to determine whether a certainpiece of equipment should be written down due to impairment. Thecost of the equipment is $1,200,000 with accumulated depreciationto date of $600,000. The life of the equipment is 12 years with nosalvage value. On December 31, 2014 management determined thefuture net cash flows to be $500,000 and the fair value to be$450,000. The company intends to use the equipment in thefuture.

Required:

1)Record the entry (if any) to recordthe impairment at December 31, 2014.

2)Record the depreciation expense for2015

3)Suppose at the end of 2015 the fairvalue of the asset is $490,000. What entry if any would AndrewCompany record.

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Beverley Smith
Beverley SmithLv2
28 Sep 2019

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