Presented below is information related to equipment owned by Cullumber Company at December 31, 2017.

Cost$9,540,000Accumulated depreciation to date1,060,000Expected future net cash flows7,420,000Fair value5,088,000

Cullumber intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $21,200. As of December 31, 2017, the equipment has a remaining useful life of5years.

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Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017.

DateAccount Titles and Explanation

Debit

Credit

Dec. 31

Prepare the journal entry (if any) to record depreciation expense for 2018.

Account Titles and Explanation

Debit

Credit

The asset was not sold by December 31, 2018. The fair value of the equipment on that date is $5,618,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $21,200.

DateAccount Titles and Explanation

Debit

Credit

Dec. 31