Question

Presented below is information related to equipment owned by Nash Company at December 31, 2020. Cost $9,180,000 Accumulated depreciation to date 1.020,000 Expected future net cash flows 7.140,000 Fair value 4,896,000 Assume that Nash will continue to use this asset in the future. 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 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

Answer 1

(a)
Date	Account Titles and Explanation	Debit	Credit
Dec. 31	Loss on impairment	$ 3,264,000
	Accumulated depreciation-Equipment		$ 3,264,000
	(To record the Impairment of the Asset )

Working note :
Cost	$ 9,180,000
Less: Accumulated depreciation	($ 1,020,000)
Carrying Amount	$ 8,160,000
Less: Fair value	($ 4,896,000)
Loss on impairment	$ 3,264,000

(b)
Account Titles and Explanation	Debit	Credit
Depreciation expense ( $ 4,896,000 / 5 Years )	$ 979,200
Accumulated depreciation-Equipment		$ 979,200
(To record the Depreciation Expense for 2021 )

(C )
Date	Account Titles and Explanation	Debit	Credit
Dec. 31	No entry	$ 0
	No entry		$ 0
	(No Entry Since restoration of impairment loss is not allowed )