Question

Exercise 11-17 Presented below is information related to equipment owned by Metlock Company at December 31, 2020. Cost Accumulated depreciation to date Expected future net cash flows Fair value $9,900,000 1,100,000 7,700,000 5,280,000 Metlock intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $22,000. As of December 31, 2020, the equipment has a remaining useful life of 5 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 o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation Dec. 31 Prepare the journal entry (if any) to record depreciation expense for 2021. (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.)

Answer 1

a
Account Titles and Explanation	Debit	Credit
Loss on impairment	3542000
Accumulated depreciation-Equipment		3542000
b
Account Titles and Explanation	Debit	Credit
No entry	0
No entry		0
Workings:
Cost	9900000
Less: Accumulated depreciation	1100000
Carrying Amount	8800000
Less: Fair value, net of disposal costs	5258000		=5280000-22000
Loss on impairment	3542000
No depreciation is recorded on assets intended to be disposed off