PLEASE ANSWER ALL QUESTIONS Exercise 11-16 Account Titles and Explanation Debit
ID: 2501103 • Letter: P
Question
PLEASE ANSWER ALL QUESTIONS
Exercise 11-16
Account Titles and Explanation
Debit
Credit
Account Titles and Explanation
Debit
Credit
Account Titles and Explanation
Debit
Credit
Exercise 11-16
Presented below is information related to equipment owned by Suarez Company at December 31, 2014.Cost $ 16,875,000 Accumulated depreciation to date 1,875,000 Expected future net cash flows 13,125,000 Fair value 9,000,000
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 5 years.
Explanation / Answer
Answer: Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2014.
Loss on impairment A/C Dr. $6000,000
To Accumulated depreciation-Equipment A/C $6000,000
Answer: Prepare the journal entry to record depreciation expense for 2015.
Depreciation expense A/C Dr. $ 1,800,000
To Accumulated depreciation-EquipmentA/C $ 1,800,000
Answer: The fair value of the equipment at December 31, 2015, is $9,562,500. Prepare the journal entry (if any) necessary to record this increase in fair value.
No Journal entry is required.
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