Exercise 11-16 Presented below is information related to equipment owned by Metl
ID: 2518815 • Letter: E
Question
Exercise 11-16 Presented below is information related to equipment owned by Metlock Company at December 31, 2017. $10,800,000 Accumulated depreciation to date1,200,000 8,400,000 5,760,000 Expected future net cash flows Fair value Assume that Metlock will continue to use this asset in the future. 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 Prepare the journal entry to record depreciation expense for 2018. (If no entry is required, select "No entry" for the accountExplanation / Answer
Book vlaue=cost-acc depreciation
=10800000-1200000=9600000
fair value=5760000
impairement loss=3840000
THis is higher than tha fair value so there is impairement
loss on impairement(db) 3840000
Accumulated depreciation(cr)3840000
b)New carrying amount=5760000
Life=5 years
Depreciation=5760000/5=1152000
Depreciatio expense(dB)1152000
Acc depreciation(cr)1152000
c)Restoration of any impairment loss is not permitted if the asset is held for use, so there is no entry
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