. Presented below is information related to equipment owned by Swiss Company at December 31, 2013:

Cost $9,000,000

Acc. depreciation to date 1,000,000

Expected undiscounted future cash flows 7,000,000

Fair Value 4,800,000

Assume that Swiss Company will continue to use the asset in the future. As of December 31, 2013, the equipment has a remaining useful life of 4 years and Swiss uses the straight line method of depreciation.

REQUIRED:

1. Prepare the journal entry to record the impairment at December 31, 2013.

2. Prepare the journal entry to record depreciation expense for 2014.

3. Prepare the journal entry (if any) necessary to record the increase in fair value to $5,100,000 as of December 31, 2014.

4. Would your answer to (3) be different if Swiss intended to dispose of the equipment rather than use it in the future?