Exercise 11-16 Presented below is information related to equipment owned by Vaug

Question

Exercise 11-16 Presented below is information related to equipment owned by Vaughn Company at December 31, 2017 Cost Accumulated depreciation to date 1,060,000 Expected future net cash flows 7,420,000 Fair value $9,540,000 5,088,000 Assume that Vaughn 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 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Dec. 31

Explanation / Answer

Dec-31 Loss on Impairment 3392000 =(9540000-1060000)-5088000       Accumulated Depreciation—Equipment 3392000 Dec-31 Depreciation Expense 1017600 =5088000/5       Accumulated Depreciation—Equipment 1017600 Dec-31 No entry No entry

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