Exercise 11-16 Prepare the journal entry (if any) to record the impairment of th

Question

Exercise 11-16

Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entry to record depreciation expense for 2018. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

The fair value of the equipment at December 31, 2018, is $6,273,000. Prepare the journal entry (if any) necessary to record this increase in fair value. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Accumulated Depreciation-Building
Accumulated Depreciation-Equipment
Accumulated Depreciation-Machinery
Accumulated Depreciation-Plant Assets
Accumulated Depreciation-Trucks
Buildings
Cash
Coal Mine
Depreciation Expense
Equipment
Gain on Disposal of Machinery
Inventory
Loss on Disposal of Plant Assets
Loss on Impairment
Machinery
Maintenance and Repairs Expense
No Entry
Paid-in Capital in Excess of Par - Common Stock
Plant Assets
Recovery of Loss from Impairment
Retained Earnings
Trucks

Exercise 11-16

Presented below is information related to equipment owned by Sunland Company at December 31, 2017.
Cost $11,070,000 Accumulated depreciation to date 1,230,000 Expected future net cash flows 8,610,000 Fair value 5,904,000
Assume that Sunland will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years.

Explanation / Answer

31-Dec Loss on Impairment 3936000 =(11070000-1230000)-5904000          Accumulated Depreciation—Equipment 3936000 31-Dec Depreciation Expense 1476000 =5904000/4          Accumulated Depreciation—Equipment 1476000 31-Dec NO entry 0 NO entry 0

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