Splish Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for$12,400,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introducedthat would accelerate the obsolescence of Splish's equipment. Splish's controller estimates that expected future net cash flows on theequipment will be $7,812,000 and that the fair value of the equipment is $6,944,000. Splish intends to continue using the equipment,but it is estimated that the remaining useful life is 4 years. Splish uses straight-line depreciation.(a)(c)Prepare the journal entry (if any) to record the impairment at December 31, 2020. (If no entry is required, select "No entry" for theaccount titles and enter O for the amounts. Credit account titles are automatically Indented when amount is entered. Do not Indentmanually)Date Account Titles and ExplanationDec. 31(b)Textbook and MediaDate Account Titles and ExplanationPrepare all required journal entries (if any) at December 31, 2021. The fair value of the equipment at December 31, 2021, isestimated to be $7,316,000. (If no entry is required, select "No entry for the account titles and enter O for the amounts Credit accounttitles are automatically indented when amount is entered. Do not Inderit manually)Dec. 31eTextbook and MediaList of AccountsSave for LaterDate Account Titles and Explanation12/31/201Debit12/31/21eTextbook and MediaDebitCreditPrepare the journal entry (if any) to record the impairment at December 31, 2020 and for the equipment at December 31, 2021.assuming that Splish intends to dispose of the equipment and that it has not been disposed of as of December 31, 2021. (If no entryis required, select "No entry for the account titles and enter O for the amounts. Credit account titles are automatically Indented whenamount is entered. Do not Indent manually)DebitCreditAttempts: 0 of 5 usedSubmit AnswerCredit

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Description: Splish Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for$12,400,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introdu

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Splish Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $12,400,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Splish's equipment. Splish's controller estimates that expected future net cash flows on the equipment will be $7,812,000 and that the fair value of the equipment is $6,944,000. Splish intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Splish uses straight-line depreciation. (a) Prepare the journal entry (if any) to record the impairment at December 31, 2020. (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) Date Account Titles and Explanation Dec. 31 Debit Credit

Splish Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $12,400,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Splish's equipment. Splish's controller estimates that expected future net cash flows on the equipment will be $7,812,000 and that the fair value of the equipment is $6,944,000. Splish intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Splish uses straight-line depreciation. (a) Prepare the journal entry (if any) to record the impairment at December 31, 2020. (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) Date Account Titles and Explanation Dec. 31 Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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

Splish Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for
$12,400,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced
that would accelerate the obsolescence of Splish's equipment. Splish's controller estimates that expected future net cash flows on the
equipment will be $7,812,000 and that the fair value of the equipment is $6,944,000. Splish intends to continue using the equipment,
but it is estimated that the remaining useful life is 4 years. Splish uses straight-line depreciation.
(a)
(c)
Prepare the journal entry (if any) to record the impairment at December 31, 2020. (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)
Date Account Titles and Explanation
Dec. 31
(b)
Textbook and Media
Date Account Titles and Explanation
Prepare all required journal entries (if any) at December 31, 2021. The fair value of the equipment at December 31, 2021, is
estimated to be $7,316,000. (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 Inderit manually)
Dec. 31
eTextbook and Media
List of Accounts
Save for Later
Date Account Titles and Explanation
12/31/201
Debit
12/31/21
eTextbook and Media
Debit
Credit
Prepare the journal entry (if any) to record the impairment at December 31, 2020 and for the equipment at December 31, 2021.
assuming that Splish intends to dispose of the equipment and that it has not been disposed of as of December 31, 2021. (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)
Debit
Credit
Attempts: 0 of 5 used
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