Presented below is information related to equipment owned by Pujols SpA at December 31, 2019.

Cost

Accumulated depreciation to date V alue-in-use

Fair value less cost of disposal

$9,000,000 1,000,000 7,000,000 4,400,000

Assume that Pujols will continue to use this asset in the future. As of December 31, 2019, the equipment has a remaining useful life of 4 years.

Required:

1. (a)Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2019.
2. (b)Prepare the journal entry to record depreciation expense for 2020. The recoverable amount of the equipment at December 31, 2020, is $6,000,000. Prepare the journal entry (if any) necessary to record this increase.