Presented below is information related to equipment owned by Novak Company at December 31, 2025. Cost Accumulated depreciation to date Expected future net cash flows Fair value $11,250,000 1,250,000 8,750,000 Dec. 31 6,000,000 Novak intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $25,000. As of December 31, 2025, the equipment has a remaining useful life of 4 years. The asset was not sold by December 31, 2026. The fair value of the equipment on that date is $6,625,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $25,000. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.) Date Account Titles and Explanation Debit Credit

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Presented below is information related to equipment owned by Novak Company at December 31, 2025.
Cost
Accumulated depreciation to date
Expected future net cash flows
Fair value
$11,250,000
1,250,000
8,750,000
Dec. 31
6,000,000
Novak intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $25,000. As of December
31, 2025, the equipment has a remaining useful life of 4 years.
The asset was not sold by December 31, 2026. The fair value of the equipment on that date is $6,625,000. Prepare the journal
entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $25,000. (If no entry is
required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when
amount is entered. Do not indent manually. List debit entry before credit entry.)
Date Account Titles and Explanation
Debit
Credit
Transcribed Image Text:Presented below is information related to equipment owned by Novak Company at December 31, 2025. Cost Accumulated depreciation to date Expected future net cash flows Fair value $11,250,000 1,250,000 8,750,000 Dec. 31 6,000,000 Novak intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $25,000. As of December 31, 2025, the equipment has a remaining useful life of 4 years. The asset was not sold by December 31, 2026. The fair value of the equipment on that date is $6,625,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $25,000. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.) Date Account Titles and Explanation Debit Credit
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