Presented below is information related to equipment owned by Marley Company at December 31, 2015.

Cost 7,000,000

Accumulated depreciation to date1,500,000

Value-in-use 5,000,000

Fair value less cost of disposal4,400,000

Assume that Marley will continue to use this asset in the future. As of December 31, 2015, the equipment has a remaining useful of 4 years.

Instructions

(a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2015.

(b) Prepare the journal entry to record depreciation expense for 2016.

(c) The recoverable amount of the equipment at December 31, 2016, is 5,250,000. Prepare the journal entry (if any) necessary to record this increase.