PLEASE ANSWER ALL QUESTIONS Exercise 11-17 Account Titles and Explanation Debit
ID: 2501105 • Letter: P
Question
PLEASE ANSWER ALL QUESTIONS
Exercise 11-17
Account Titles and Explanation
Debit
Credit
Account Titles and Explanation
Debit
Credit
Account Titles and Explanation
Debit
Credit
PLEASE ANSWER ALL QUESTIONS
Exercise 11-17
Presented below is information related to equipment owned by Suarez Company at December 31, 2014.Cost $ 13,788,000 Accumulated depreciation to date 1,532,000 Expected future net cash flows 10,724,000 Fair value 7,353,600
Suarez intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $ 30,640 . As of December 31, 2014, the equipment has a remaining useful life of 5 years.
Explanation / Answer
1. Cost of Equipment = $ 13,788,000
Less ; Accumulated Depreciation = $ 1,532,00
(Being depreciation charged )
Dec. 31, 2015 Profit & Loss a/c $ 2,451,000
Profit and loss a/c )
3 No Journlal entry required for 2015: For 2015, Recoverable amout is the higher of Value in Use $ 10,724,000
and Net Fair value 8,088,960 i.e 10,724,000 . Carrying amount i.e 10,724,000 less Depreciation for 2015 $ 2,144,800=8,579,200.Hence, Impairment loss = Carrying amount $ 8,579,200 - Value in use $ 10,724,000 = (2,144,800). Since recoverable value is more than carrying amount, no impairment loss, So, no need of Journal entry for 2015.
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