- If the asset is intended to be disposed of, it is reported at the lower of cost or fair value less cost to dispose of i.e., net realizable value). There is no depreciation expense for impaired assets being held for disposal because their costs are recovered through the sale. Restoration of the impairment loss is possible, but only up to the carrying amount of the asset prior to impairment. E11-17. (Impairment) Assume the same information as E11-16, except that Suarez intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $20,000 Instructions (a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. not us (b) Prepare the journal entry (if any) to record depreciation expense for 2018. (@) The asset was not sold by December 31, 2018. The fair value of the equipment on that date is $5,300,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $20,000. E11-16. (Impairment) 3 Presented below is information related to equipment owned by Suarez Company at December 31, 2017. 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, 2017, 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, 2017. (b) Prepare the journal entry to record depreciation expense for 2018. (c) The fair value of the equipment at December 31, 2018, is $5,100,000. Prepare the journal entry (if any) necessary to record this increase in fair value. not nir volve. po