Question

resented below is information related to equipment owned by Pearl Company at December 31, 2017. Cost...

resented below is information related to equipment owned by Pearl Company at December 31, 2017.

Cost $10,170,000
Accumulated depreciation to date 1,130,000
Expected future net cash flows 7,910,000
Fair value 5,424,000


Assume that Pearl will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years.

a. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

b. Prepare the journal entry to record depreciation expense for 2018. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

c. The fair value of the equipment at December 31, 2018, is $5,763,000. Prepare the journal entry (if any) necessary to record this increase in fair value. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Homework Answers

Answer #1
a
Loss on impairment 3616000
         Accumulated depreciation-Equipment 3616000
b
Depreciation expense 1356000
         Accumulated depreciation-Equipment 1356000
c
No entry 0
        No entry 0
Workings:
Cost 10170000
Less: Accumulated depreciation 1130000
Carrying Amount 9040000
Less: Fair value 5424000
Loss on impairment 3616000
Carrying value of Equipment 5424000
Remaining useful life 4
Depreciation expense 1356000
No entry is necessary to record the increase in fair value
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Presented below is information related to equipment owned by Sheridan Company at December 31, 2017. Cost...
Presented below is information related to equipment owned by Sheridan Company at December 31, 2017. Cost $9,720,000 Accumulated depreciation to date 1,080,000 Expected future net cash flows 7,560,000 Fair value 5,184,000 Assume that Sheridan will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 5 years. a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry is...
Presented below is information related to equipment owned by Whispering Company at December 31, 2017. Cost...
Presented below is information related to equipment owned by Whispering Company at December 31, 2017. Cost $10,350,000 Accumulated depreciation to date 1,150,000 Expected future net cash flows 8,050,000 Fair value 5,520,000 Assume that Whispering will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry is required,...
Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. Cost...
Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. Cost $10,890,000 Accumulated depreciation to date 1,210,000 Expected future net cash flows 8,470,000 Fair value 5,808,000 Cullumber intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $24,200. As of December 31, 2017, the equipment has a remaining useful life of 4 years. a. Prepare the journal entry (if any) to record the impairment of...
Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. Cost...
Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. Cost $10,440,000 Accumulated depreciation to date 1,160,000 Expected future net cash flows 8,120,000 Fair value 5,568,000 Cullumber intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $23,200. As of December 31, 2017, the equipment has a remaining useful life of 5 years. Prepare the journal entry (if any) to record the impairment of the...
Presented below is information related to equipment owned by Ivanhoe Company at December 31, 2017. Cost  ...
Presented below is information related to equipment owned by Ivanhoe Company at December 31, 2017. Cost       $10,080,000 Accumulated depreciation to date       1,120,000 Expected future net cash flows       7,840,000 Fair value       5,376,000 Ivanhoe intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $22,400. As of December 31, 2017, the equipment has a remaining useful life of 5 years.    Prepare the journal entry (if any) to...
Presented below is information related to equipment owned by Wildhorse Company at December 31, 2020. Cost...
Presented below is information related to equipment owned by Wildhorse Company at December 31, 2020. Cost $10,620,000 Accumulated depreciation to date 1,180,000 Expected future net cash flows 8,260,000 Fair value 5,664,000 Wildhorse intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $23,600. As of December 31, 2020, the equipment has a remaining useful life of 5 years. a.)Prepare the journal entry (if any) to record the impairment of the...
Presented below is information related to equipment owned by Waterway Company at December 31, 2020. Cost...
Presented below is information related to equipment owned by Waterway Company at December 31, 2020. Cost $10,710,000 Accumulated depreciation to date 1,190,000 Expected future net cash flows 8,330,000 Fair value 5,712,000 Waterway intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $23,800. As of December 31, 2020, the equipment has a remaining useful life of 4 years. Prepare the journal entry (if any) to record the impairment of the...
Exercise 11-16 Presented below is information related to equipment owned by Shamrock Company at December 31,...
Exercise 11-16 Presented below is information related to equipment owned by Shamrock Company at December 31, 2017. Cost $10,260,000 Accumulated depreciation to date 1,140,000 Expected future net cash flows 7,980,000 Fair value 5,472,000 Assume that Shamrock will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 5 years. A. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no...
Presented below is information related to copyrights owned by Cullumber Company at December 31, 2020. Cost...
Presented below is information related to copyrights owned by Cullumber Company at December 31, 2020. Cost $8,590,000 Carrying amount 4,430,000 Expected future net cash flows 4,190,000 Fair value 3,330,000 Assume that Cullumber Company will continue to use this copyright in the future. As of December 31, 2020, the copyright is estimated to have a remaining useful life of 10 years. Prepare the journal entry to record the impairment of the asset at December 31, 2020. The company does not use...
Exercise 12-13 Presented below is information related to copyrights owned by Crane Company at December 31,...
Exercise 12-13 Presented below is information related to copyrights owned by Crane Company at December 31, 2020. Cost $8,530,000 Carrying amount 4,260,000 Expected future net cash flows 3,930,000 Fair value 3,580,000 Assume that Crane Company will continue to use this copyright in the future. As of December 31, 2020, the copyright is estimated to have a remaining useful life of 10 years. A.) Prepare the journal entry to record the impairment of the asset at December 31, 2020. The company...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT