Answered: a) Prepare the journal entry (if any)…

Name: Presented below is information related to equipment owned by Bramble C
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Description: Presented below is information related to equipment owned by Bramble Company at December 31, 2020. Cost $10,260,000Accumulated depreciation to date 1,140,000Expected future net cash flows 7,980,000Fair value 5,472,000 Assume that Bramble will continu

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a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. b) Prepare the journal entry to record depreciation expense for 2021.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

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

Cost $10,260,000

Accumulated depreciation to date 1,140,000

Expected future net cash flows 7,980,000

Fair value 5,472,000

Assume that Bramble will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 5 years.

a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020.

b) Prepare the journal entry to record depreciation expense for 2021.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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