Exercise 11-16 Presented below is information related to equipment owned by Suar
ID: 2481822 • Letter: E
Question
Exercise 11-16 Presented below is information related to equipment owned by Suarez Company at December 31, 2014. Cost $ 20,457,000 Accumulated depreciation to date 2,273,000 Expected future net cash flows 15,911,000 Fair value 10,910,400 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. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2014. (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 SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the journal entry to record depreciation expense for 2015. (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 SHOW LIST OF ACCOUNTS LINK TO TEXT The fair value of the equipment at December 31, 2015, is $11,592,300. 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.) Date Account Titles and Explanation Debit Credit Dec. 31
Explanation / Answer
Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2014 .
Dr. Loss on Impairment $7,273,600
Cr. Accumulated Depriciation $7,273,600
Dr. Depriciation $2,727,600
Cr. Accumulated Depreciation $2,727,600
new carrying amount/useful life
=10,910,400/4
$2,727,600
No entry-Restoration of imparied assest is not permitted
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