Sloane, Inc. purchased equipment in 2005 at a cost of $600,000. Two years later it became apparent to Sloane, Inc. that this equipment had suffered an impairment of value. In early 2007, the book value of the asset is $360,000 and it is estimated that the fair value is now only $240,000. The entry to record the impairment is
a.No entry is necessary as a write-off violates the historical cost principle.
Retained Earnings 120,000
b.Accumulated Depreciation—Equipment 120,000
Loss on Impairment of Equipment 120,000
c.Accumulated Depreciation—Equipment 120,000
Retained Earnings 120,000
d.Reserve for Loss on Impairment of Equipment 120,000
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