Answer and Explanation:
The journal entry to record the impairment of the loss is shown below:
Loss on impairment Dr $3,670,800
To Accumulated depreciation - Equipment $3,670,800
(Being the loss on impairment is recorded)
For recording this we debited the loss on impairment as it increased the losses and credited the accumulated depreciation as it increased the balance of accumulated depreciation
Working note:
Cost $10,260,000
Less: Accumulated depreciation -$1,140,000
Carrying Amount $9,120,000
Less Fair value -$5,472,000
Plus: Cost of disposal $22,800
Loss on impairment $3,670,800
