Your answer is partially correct. Assume that Sweet Acacia is a private company that follows ASPE. (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.) 1. Prepare the journal entry at December 31, 2020, to record asset impairment, if any. 2. Prepare the journal entry to record depreciation expense for 2021. 3. Assume that the asset was not sold by December 31, 2021. The equipment's fair value (and recoverable amount) on this date is $6.44 million. Prepare the journal entry, if any, to record the increase in fair value. It is expected that the costs of disposal will total $49,500. No. Account Titles and Explanation (1) Loss on Impairment Accumulated Impairment Losses - Equipment (2) No Entry No Entry Accumulated Impairment Losses - Equipment Recovery of Loss from Impairment Debit Credit 1,831,500 1,831,500 302,000 302,000
Your answer is partially correct. Assume that Sweet Acacia is a private company that follows ASPE. (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.) 1. Prepare the journal entry at December 31, 2020, to record asset impairment, if any. 2. Prepare the journal entry to record depreciation expense for 2021. 3. Assume that the asset was not sold by December 31, 2021. The equipment's fair value (and recoverable amount) on this date is $6.44 million. Prepare the journal entry, if any, to record the increase in fair value. It is expected that the costs of disposal will total $49,500. No. Account Titles and Explanation (1) Loss on Impairment Accumulated Impairment Losses - Equipment (2) No Entry No Entry Accumulated Impairment Losses - Equipment Recovery of Loss from Impairment Debit Credit 1,831,500 1,831,500 302,000 302,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
kau.3
answer must be in table format or i will give down vote
The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2020:
| Cost | $8,910,000 | |
| 990,000 | ||
| Expected future net |
6,930,000 | |
| Expected future net cash flows (discounted, value in use) | 6,286,500 | |
| Fair value | 6,138,000 | |
| Costs to sell (costs of disposal) | 49,500 |
At December 31, 2020, Sweet Acacia discontinues use of the equipment and intends to dispose of it in the coming year by selling it to a competitor. It is expected that the costs of disposal will total $49,500.
Transcribed Image Text:Your answer is partially correct.
Assume that Sweet Acacia is a private company that follows ASPE. (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.)
1.
Prepare the journal entry at December 31, 2020, to record asset impairment, if any.
2.
Prepare the journal entry to record depreciation expense for 2021.
3.
Assume that the asset was not sold by December 31, 2021. The equipment's fair value (and recoverable amount) on
this date is $6.44 million. Prepare the journal entry, if any, to record the increase in fair value. It is expected that the
costs of disposal will total $49,500.
No. Account Titles and Explanation
(1)
Loss on Impairment
Accumulated Impairment Losses - Equipment
(2)
No Entry
No Entry
Accumulated Impairment Losses - Equipment
Recovery of Loss from Impairment
Debit
Credit
1,831,500
1,831,500
302,000
302,000
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