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Identifying and Recording Impairment Loss on Equipment Bolt Company purchased equipment on January 1...

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Accounting

Identifying and Recording Impairment Loss on Equipment
Bolt Company purchased equipment on January 1 of Year 1 for $13,600. This equipment has an estimated useful life of five years, a residual value of $1,600, and is
depreciated using the sum-of-the-years'-digits method. At the beginning of Year 3, Bolt suspects that the original investment in the asset will not be realized; the
total remaining future cash inflow expected to be produced through use of the equipment, including the original residual value, is $4,000. The equipment's fair
value at January 1 of Year 3 is $2,800.
a. Determine whether the asset is impaired and, if so, the amount of the impairment loss on January 1 of Year 3.
Note: If the asset is not impaired, enter a zero (or leave blank) for the loss.
Note: Do not use a negative sign with your answer.
$
b. Compute depreciation for Year 3.
$
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