Exercise 11-16 Warning Don\'t show me this message again for the assignment Ok C
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Exercise 11-16
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Exercise 11-16
Presented below is information related to equipment owned by Suarez Company at December 31, 2014.Cost $ 21,267,000 Accumulated depreciation to date 2,363,000 Expected future net cash flows 16,541,000 Fair value 11,342,400
Assume that Suarez will continue to use this asset in the future. As of December 31, 2014, the equipment has a remaining useful life of 4 years.
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Explanation / Answer
Carrying Amount = 21267000-2363000
= $ 18904000
Recoverable Amount = Recoverable amount is the higher of fair value less costs to sell and value in use.
Fair Value = 11342400
Value in use is present value of Future cash flows = 16541000
Higher $ 16541000
Carrying amount = 18904000 and Recoverable amount = 16541000
Impairment loss = $ 2363000
loss on impairment debit $ 2363000
accumulated depreciation - Equipment credit $ 2363000
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