Exercise 5-21 (Algo) Asset Impairment [LO 5-2] In the current year, the bulding occupled by Sunshine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Sunshine City area, although hurricanes in Sunshine City's geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $2.100,000 and had accumulated depreciation of $525,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the Impairment loss at $240,000, however, the city expects during the next fiscal year to recelve insurance recoverles of $125,000 for the damage. Required a Should the estimated impairment loss be reported as an extraordinary item? As a special item? OA special Item O An extraordinary Item O Ordinary expense, disclosed in the notes to the financial statements A Record the estimated Impairment loss in the journal for govemmental activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" In the first account field.) Governmental Activties Transaction General Journal Debit Credit Record the estimated impaimment loss Govemmental Actvities Buidings c How should the Insurance recovery be reported in the following fiscal year?
Exercise 5-21 (Algo) Asset Impairment [LO 5-2] In the current year, the bulding occupled by Sunshine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Sunshine City area, although hurricanes in Sunshine City's geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $2.100,000 and had accumulated depreciation of $525,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the Impairment loss at $240,000, however, the city expects during the next fiscal year to recelve insurance recoverles of $125,000 for the damage. Required a Should the estimated impairment loss be reported as an extraordinary item? As a special item? OA special Item O An extraordinary Item O Ordinary expense, disclosed in the notes to the financial statements A Record the estimated Impairment loss in the journal for govemmental activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" In the first account field.) Governmental Activties Transaction General Journal Debit Credit Record the estimated impaimment loss Govemmental Actvities Buidings c How should the Insurance recovery be reported in the following fiscal year?
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter10: Long-lived Tangible And Intangible Assets
Section: Chapter Questions
Problem 24E
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![Exercise 5-21 (Algo) Asset Impairment [LO 5-2]
In the current year, the bullding occupted by Sunshine City's Culture and Recreation Department suffered severe structural damage as
a result of a hurricane. It had been 48 years stnce a hurricane had hit the Sunshine City area, although huricanes In Sunshine City's
geographic area are not uncommon. The bullding had been purchased 10 years earler at a cost of $2.100,000 and had accumulated
depreciation of $525,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the Impairment
loss at $240,000, however, the city expects durtng the next fiscal year to recelve insurance recoverles of $125,000 for the damage.
Required
a Should the estimated impairment loss be reported as an extraordinary tem? As a special Item?
OA special Item
O An extraordinary Item
O Ordinary expense, disclosed in the notes to the financial statements
A Record the estimated Impairment loss In the journal for govemmental activitles at the government-wide level. (If no entry is
required for a transection/event, select "No Journal Entry Required" In the first account fleld.)
Gevernmental
Activties
Transaction
General Journal
Debit
Credit
1 Record the estmated impaiment loss
Govemmental Activities
Buildings
C. How should the Insurance recovery be reported in the following fiscal year?
O Program revenue
O Service revenue](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd6dd7d0b-b53b-45d5-b862-2dfbd75d7db3%2F7637f8ee-8673-4768-8310-91f5797de9f8%2Ff75nmac_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 5-21 (Algo) Asset Impairment [LO 5-2]
In the current year, the bullding occupted by Sunshine City's Culture and Recreation Department suffered severe structural damage as
a result of a hurricane. It had been 48 years stnce a hurricane had hit the Sunshine City area, although huricanes In Sunshine City's
geographic area are not uncommon. The bullding had been purchased 10 years earler at a cost of $2.100,000 and had accumulated
depreciation of $525,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the Impairment
loss at $240,000, however, the city expects durtng the next fiscal year to recelve insurance recoverles of $125,000 for the damage.
Required
a Should the estimated impairment loss be reported as an extraordinary tem? As a special Item?
OA special Item
O An extraordinary Item
O Ordinary expense, disclosed in the notes to the financial statements
A Record the estimated Impairment loss In the journal for govemmental activitles at the government-wide level. (If no entry is
required for a transection/event, select "No Journal Entry Required" In the first account fleld.)
Gevernmental
Activties
Transaction
General Journal
Debit
Credit
1 Record the estmated impaiment loss
Govemmental Activities
Buildings
C. How should the Insurance recovery be reported in the following fiscal year?
O Program revenue
O Service revenue
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