In: Accounting
Presented below is information related to equipment owned by Bonita Company at December 31, 2020.
Cost | $9,810,000 | |
Accumulated depreciation to date | 1,090,000 | |
Expected future net cash flows | 7,630,000 | |
Fair value | 5,232,000 |
Bonita intends to dispose of the equipment in the coming year. It
is expected that the cost of disposal will be $21,800. As of
December 31, 2020, the equipment has a remaining useful life of 4
years.
Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (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.)
Date |
Account Titles and Explanation |
Debit |
Credit |
---|---|---|---|
Dec. 31 |
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
Prepare the journal entry (if any) to record depreciation expense for 2021. (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.)
Account Titles and Explanation |
Debit |
Credit |
---|---|---|
enter an account title |
enter a debit amount |
enter a credit amount |
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $5,777,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $21,800. (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.)
Date |
Account Titles and Explanation |
Debit |
Credit |
---|---|---|---|
Dec. 31 |
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
a | |||
Date | Account Titles and Explanation | Debit | Credit |
Dec 31 | Loss on impairment | 3509800 | |
Accumulated depreciation-Equipment | 3509800 | ||
b | |||
Account Titles and Explanation | Debit | Credit | |
No entry | 0 | ||
No entry | 0 | ||
c | |||
Date | Account Titles and Explanation | Debit | Credit |
Dec 31 | Accumulated depreciation-Equipment | 545000 | |
Recovery of loss on Impairment | 545000 |
Workings: | |||
Cost | 9810000 | ||
Less: Accumulated depreciation | 1090000 | ||
Carrying Amount | 8720000 | ||
Less: Fair value, net of disposal costs | 5210200 | =5232000-21800 | |
Loss on impairment | 3509800 | ||
No depreciation is recorded on assets intended to be disposed off | |||
Fair value, net of disposal costs, Revised | 5755200 | =5777000-21800 | |
Less: Fair value, net of disposal costs | 5210200 | =5232000-21800 | |
Recovery of loss on Impairment | 545000 |