Assume that Pearl is a private company that follows ASPE. 1. Prepare the journal entry at December 31, 2023, to record asset impairment, if any. 2. Prepare the journal entry to record depreciation expense for 2024. 3. The equipment's fair value at December 31, 2024, is $7.41 million. Prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation December 31, 2023 December Loss on Impairment Accumulated Impairment Losses - Equipment Depreciation Expense 31, 2024 December Accumulated Depreciation - Equipment 31, 2024 Accumulated Impairment Losses - Equipment Recovery of Loss from Impairment Debit 1881000 Credit 1881000 The information that follows relates to equipment owned by Pearl Limited at December 31, 2023: Cost Accumulated depreciation to date $10,260,000 1,140,000 Expected future net cash flows (undiscounted) 7,980,000 Expected future net cash flows (discounted, value in use) 7,239,000 Fair value 7,068,000 Costs to sell (costs of disposal) 57,000 Assume that Pearl will continue to use this asset in the future. As at December 31, 2023, the equipment has a remaining useful life of four years. Pearl uses the straight-line method of depreciation.
Assume that Pearl is a private company that follows ASPE. 1. Prepare the journal entry at December 31, 2023, to record asset impairment, if any. 2. Prepare the journal entry to record depreciation expense for 2024. 3. The equipment's fair value at December 31, 2024, is $7.41 million. Prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation December 31, 2023 December Loss on Impairment Accumulated Impairment Losses - Equipment Depreciation Expense 31, 2024 December Accumulated Depreciation - Equipment 31, 2024 Accumulated Impairment Losses - Equipment Recovery of Loss from Impairment Debit 1881000 Credit 1881000 The information that follows relates to equipment owned by Pearl Limited at December 31, 2023: Cost Accumulated depreciation to date $10,260,000 1,140,000 Expected future net cash flows (undiscounted) 7,980,000 Expected future net cash flows (discounted, value in use) 7,239,000 Fair value 7,068,000 Costs to sell (costs of disposal) 57,000 Assume that Pearl will continue to use this asset in the future. As at December 31, 2023, the equipment has a remaining useful life of four years. Pearl uses the straight-line method of depreciation.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter7: Fixed Assets, Natural Resources, And Intangible Assets
Section: Chapter Questions
Problem 7.3.4MBA
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Transcribed Image Text:Assume that Pearl is a private company that follows ASPE.
1.
Prepare the journal entry at December 31, 2023, to record asset impairment, if any.
2.
Prepare the journal entry to record depreciation expense for 2024.
3.
The equipment's fair value at December 31, 2024, is $7.41 million. Prepare the journal entry, if any, to record the
increase in fair value.
(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Date
Account Titles and Explanation
December
31, 2023
December
Loss on Impairment
Accumulated Impairment Losses - Equipment
Depreciation Expense
31, 2024
December
Accumulated Depreciation - Equipment
31, 2024
Accumulated Impairment Losses - Equipment
Recovery of Loss from Impairment
Debit
1881000
Credit
1881000
Transcribed Image Text:The information that follows relates to equipment owned by Pearl Limited at December 31, 2023:
Cost
Accumulated depreciation to date
$10,260,000
1,140,000
Expected future net cash flows (undiscounted)
7,980,000
Expected future net cash flows (discounted, value in use)
7,239,000
Fair value
7,068,000
Costs to sell (costs of disposal)
57,000
Assume that Pearl will continue to use this asset in the future. As at December 31, 2023, the equipment has a remaining useful life of
four years. Pearl uses the straight-line method of depreciation.
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