Question

Roland Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10,000,000 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 Roland's equipment. Roland's controller estimates that expected future net cash flows on the equipment will be $6,300,000 and that the fair value of the equipment is $5,600,000. Roland intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Roland uses straight-line depreciation. Your answer is correct. 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 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 Tloss on Impairment Dec. 317 1900000 Accumulated Depreciati 1900000

Answer 1

I credit | Answer! Journal Entry Date I particulars Debit Dec 31 Depreciation expense Alc ar $ 1,400,000 2021 $5600000/4 years TO Accumulated Depreciation (Being to record the depreciation expense) $ 1400000