Lamar Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should
A) recognize an extraordinary loss for the period.
B) include a credit to the equipment accumulated depreciation account.
C) include a credit to the equipment account.
D) not be made if the equipment is still being used.

Question

Quizplus · Accepted Answer

When a company determines that a long-term asset, such as equipment, has suffered a permanent impairment in value, it should recognize a loss by reducing the carrying amount of the asset on its balance sheet. This is typically done by crediting the asset's accumulated depreciation account to reflect the lower value of the asset. This reduction in carrying amount should be recorded as a loss on the income statement. Therefore, the entry to record the impairment should include a credit to the equipment accumulated depreciation account.

Lamar Printing Company Determines That a Printing Press Used in Its