Prepare the journal entry (if any) to record the impairment of the asset

FratBro23
Category:
Business & Finance
Price: $10 USD

Question description

Exercise 11-17

Presented below is information related to equipment owned by Pujols Company at December 31, 2012.

Cost

$15,390,000

Accumulated depreciation to date

1,710,000

Expected future net cash flows

11,970,000

Fair value

7,524,000


Pujols intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $34,200. As of December 31, 2012, the equipment has a remaining useful life of 4 years.

(a)Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2012.(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


(b)Prepare the journal entry (if any) to record depreciation expense for 2013 using straight-line method.(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


(c)The asset was not sold by December 31, 2013. The fair value of the equipment on that date is $8,721,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $34,200.(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


Tutor Answer

(Top Tutor) Daniel C.
(997)
School: Rice University
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