Presented below is information related to equipment owned by Blue Company at December 31, 2020.Cost $10,980,000Accumulated depreciation to date 1,220,000Expected future net cash flows 8,540,000Fair value 5,856,000Assume that Blue will continue to use this asset in the future. As of December 31, 2020, 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, 2020. (If no entry is required, select"No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented whenamount is entered. Do not indent manually.)DateAccount Titles and ExplanationDebitCreditDec. 31Loss on ImpairmentAccumulated Depreciation-Equipment

Journal Entries: are the first recording of any transaction in the books of accounts. These entries…

Answered: 8,540,000 Fair value 5,856,0

Business

Accounting

8,540,000 Fair value 5,856,0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Presented below is information related to equipment owned by Blue Company at December 31, 2020.

Cost		$10,980,000
Accumulated depreciation to date		1,220,000
Expected future net cash flows		8,540,000
Fair value		5,856,000

Assume that Blue will continue to use this asset in the future. As of December 31, 2020, 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, 2020. (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
Credit
Dec. 31
Loss on Impairment
Accumulated Depreciation-Equipment

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