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Presented below is information related to equipment owned by ALALI Company at December 31, 2010. Cost SAR 7,000,000 Accumulated depreciation to date 1,500,000 Value-in-use 5,000,000

Presented below is information related to equipment owned by ALALI Company at December 31, 2010.

Cost SAR 7,000,000

Accumulated depreciation to date 1,500,000

Value-in-use 5,000,000

Fair value less cost of disposal 4,400,000

Assume that ALALI will continue to use this asset in the future. As of December 31, 2010, the equipment has a remaining useful of 4 years.

Instructions

Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2010.

Prepare the journal entry to record depreciation expense for 2011.

The recoverable amount of the equipment at December 31, 2011, is SAR 5,250,000. Prepare the journal entry (if any) necessary to record this increase.

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