Presented below is information related to equipment owned by Suarez Company at December 31, 2020. Cost.........................................................$9,000,000 Accumulated

Question:

Presented below is information related to equipment owned by Suarez Company at December 31, 2020.

Cost.........................................................$9,000,000
Accumulated depreciation to date........1,000,000
Expected future net cash flows.............7,000,000
Fair value..................................................4,800,000


Assume that Suarez will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years.


Instructions

a. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020.

b. Prepare the journal entry to record depreciation expense for 2021.

c. The fair value of the equipment at December 31, 2021, is $5,100,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-1119503668

17th edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel

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