Presented below is information related to equipment owned by Swifty Company at December 31, 2020. Cost $9,270,000 Accumulated depreciation to date 1,030,000 Expected future net cash flows 7,210,000 Fair value 4,944,000 Assume that Swifty will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 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 enter an account title to record the transaction on December 31, 2017 enter a debit amount enter a credit amount enter an account title to record the transaction on December 31, 2017
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.
Presented below is information related to equipment owned by Swifty Company at December 31, 2020.
| Cost | $9,270,000 | |
| 1,030,000 | ||
| Expected future net |
7,210,000 | |
| Fair value | 4,944,000 |
Assume that Swifty will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years.
Prepare the
| Date |
Account Titles and Explanation
|
Debit
|
Credit
|
|---|---|---|---|
|
Dec. 31
|
enter an account title to record the transaction on December 31, 2017
|
enter a debit amount
|
enter a credit amount
|
|
enter an account title to record the transaction on December 31, 2017
|
enter a debit amount
|
enter a credit amount
|
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
