Ask Question
BusinessBusiness
28 October, 09:13

Presented below is information related to equipment owned by Cullumber Company at December 31, 2017.

Cost $4,680,000

Accumulated depreciation to date 468,000

Expected future net cash flows 3,120,000

Fair value 2,184,000

Assume that Cullumber will continue to use this asset in the future. As of December 31, 2017, 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, 2017.

(b) Prepare the journal entry to record depreciation expense for 2018.

(c) The fair value of the equipment at December 31, 2018, is $5, 100,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

+5
Answers (1)
  1. 28 October, 12:29
    0
    Answer and Explanation:

    Before recording the journal entries first we need to find out the depreciation expense which is shown below:

    Cost $4,680,000

    Less: Accumulated Deprecation-equipment $468,000

    Net Value $4,212,000

    Less: Fair value $2,184,000

    Loss on Impairment $2,028,000

    And,

    Fair value $2,184,000

    Divide by Life 4 years

    So, Depreciation Expenses $546,000

    Now the journal entry is

    1 Loss on Impairment $2,028,000

    To Accumulated Deprecation - equipment $2,028,000

    (Being the loss on impairment is recorded)

    2 Depreciation Expenses $546,000

    To Accumulated Deprecation - equipment $546,000

    (Being the depreciation expense is recorded)

    3. No journal entry is required
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. Cost $4,680,000 Accumulated ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Larkspur Distributors, Inc. had net sales in 2017 of $2,300,000. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $320,000 debit, and Allowance for Doubtful Accounts $1,500 debit.
Answers (1)
Bruce is the owner of a small design firm. He hires Richard, Tim, Cassandra and Stephanie, who are some of the best designers in his city. Each of them has experience working independently.
Answers (1)
Buisnesses may not use false statements to convince you to buy a product
Answers (1)
The following computations were made from Clay Co.'s current-year-end books:Number of days' sales in inventory 61Number of days' sales in trade accounts receivable 33What was the number of days in Clay's current-year operating cycle? A. 33B. 47C.
Answers (1)
In order to protect data, businesses need to require which of the following on their business technology? A. unique usernames and passwords B. data filtering software C. spreadsheet analysis systems
Answers (1)
New Questions in Business
Does the production function:q=100L-20/kexhibit increasing, decreasing, or constant returns to scale?
Answers (1)
Nazim wants to include putable bonds in his investment portfolio. Nazim is likely to put the bonds when: a. He has reinvestment options with higher yields b.
Answers (2)
Without trade, arturo produced and consumed 240 tacos and 120 burritos and dina produced and consumed 100 tacos and 150 burritos.
Answers (1)
If consumption spending increases from $758 to $767 billion when disposable income increases from $912 to $927 billion, it can be concluded that the marginal propensity to consume is
Answers (1)
With scarcity at the base of all material economics the key operating principle is
Answers (1)
Home » Business » Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. Cost $4,680,000 Accumulated depreciation to date 468,000 Expected future net cash flows 3,120,000 Fair value 2,184,000 Assume that Cullumber will
Sign Up Forgot Password?