Consider the following three independent scenarios:
|
1 |
2 |
3 |
|
|
Original cost of asset . |
$1,400 |
$1,400 |
$1,400 |
|
Accumulated depreciation |
400 |
400 |
400 |
|
Sum of future cash flows |
1,500 |
1,500 |
900 |
|
Fair value of the asset. |
1,100 |
800 |
800 |
1. For each of the three scenarios, answer the following questions:
a. Is the asset impaired?
b. At what amount (net of accumulated depreciation) should the asset be reported?
2. Make the journal entry required in Scenario 3.