Question

Ne management of Wildhorse Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $1,062,000 with depreciation to date of $472,000 as of December 31, 2020. On December 31, 2020, management projected its future net cash flows from this upment to be $354,000 and fair value to be $271,400. The company intends to use this equipment in the future Prepare the journal entry (if any) to record the impairment at December 31, 2020 ( 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 Dec. 31 Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT At December 31, 2021. the equipment's fair value increased to $101.400. Prepare the jour entry of any) to record this increase in fair value. (If me entry is required, select "Ne entry the account titles and enter for the amounts, Credit accounts are automatically indented when amount is entered. Do not indent manually) Debit Cred Date Account Titles and Explanation Dec. 31

Answer 1

Cost of equipment Less: Accumulated depreciation Carrying amount Less: Fair value Loss on impairment 1,062,000 -472,000 590,000 -271,400 318,600 Credit Date Account title Dec. 31, 2020 Loss on equipment impairment Accumulated depreciation Debit 318,600 318,600 Debit Credit Date Account title Dec. 31, 2021 No entry is required