Exercise 11-17 Presented below is information related to equipment owned by Culv
ID: 2585507 • Letter: E
Question
Exercise 11-17 Presented below is information related to equipment owned by Culver Company at December 31, 2017. Cost Accumulated depreciation to date 1,240,000 Expected future net cash flows Fair value $11,160,000 8,680,000 5,952,000 Culver intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $24,800. As of December 31, 2017, the equipment has a remaining useful life of 5 years. 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 O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: SIMILAR EXERCISEExplanation / Answer
Answer:
1
Date
Account title and explanation
Debit $
Credit $
31-Dec
Loss on impairment
3,968,000
Accumulated depreciation-Equipment
3,968,000
Working notes for the answer:
Cost
11,160,000
Less:
Accumulated depreciation to the date
1,240,000
9,920,000
Less: far value
5,952,000
Loss on impairment
3,968,000
_____________________________________________________
2
Date
Account title and explanation
Debit $
Credit $
Depreciation expanses
1190400
Accumulated depreciation-Equipment
1190400
Working
New carrying amount
5,952,000
Divided by
Useful life
5 years
Depreciation expanses
1190400
_______________________________________________________________
3
No entry will passed because the restoration of the impairment loss is not permitted
Date
Account title and explanation
Debit $
Credit $
31-Dec
Loss on impairment
3,968,000
Accumulated depreciation-Equipment
3,968,000
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