After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The equipment had cost $750,000, accumulated depreciation was $550,000, and its fair value (based on estimated future cash flows from selling the equipment) was $50,000. Determine whether the equipment is impaired. Prepare the journal entries to record the impaired asset.

Answer:The fair value is $200,000 and the book value is $150,000. Therefore the asset is impaired.Journal EntryExplanation:Cost of Equipment                           $750,000Less: Accumulated Depreciation    $550,000Book Value of equipment  a           $200,000Less Fair Value b                               $50,000Impairment Loss(a-b)                        $150,000The Journal Entry is shown below:-Accumulated Depreciation Dr, $550,000         To Equipment                                       $550,000(Being to remove accumulated depreciation on equipment is recorded)Impairment Loss Dr, $150,000             To Equipment               $150,000(Being impairment loss on equipment is recorded)