In 2002, Yates Company purchased land and a building at a cost of $2,000,000, with $600,000 allocated to land and $1,400,000 to the building. On December 31, 2011, the accounting records showed the following:

During 2012, it is determined that the building is on the site of a toxic waste dump and the future cash flows associated with the land and building are less than the recorded total book value for these two assets. The fair value of the land and building is $200,000, of which $60,000 is land. Make any journal entries necessary to record the asset impairment.

Question

In 2002, Yates Company purchased land and a building at a cost of $2,000,000, with $600,000 allocated to land and $1,400,000 to the building. On December 31, 2011, the accounting records showed the following:
 
During 2012, it is determined that the building is on the site of a toxic waste dump and the future cash flows associated with the land and building are less than the recorded total book value for these two assets. The fair value of the land and building is $200,000, of which $60,000 is land. Make any journal entries necessary to record the asset impairment.

Quizplus · Accepted Answer

The Answer of In 2002, Yates Company purchased land and a building at a cost of $2,000,000, with $600,000 allocated to land and $1,400,000 to the building. On December 31, 2011, the accounting records showed the following:
 
During 2012, it is determined that the building is on the site of a toxic waste dump and the future cash flows associated with the land and building are less than the recorded total book value for these two assets. The fair value of the land and building is $200,000, of which $60,000 is land. Make any journal entries necessary to record the asset impairment.

In 2002, Yates Company Purchased Land and a Building at a Cost