Answer and Explanation:
The journal entries are shown below:
But before that following calculations need to be done
For impairment loss
Cost $9,000,000
Less: Accumulated Deprecation-equipment $1,000,000
Net Value $8,000,000
Less: Fair value $4,800,000
Loss on Impairment $3,200,000
For depreciation expense
Fair value $4,800,000
Life 4 years
Depreciation Expenses $ 1,200,000
The journal entries are as follows:
1 Loss on Impairment $3,200,000
To Accumulated Deprecation-equipment $3,200,000
(being loss on impairment is recorded)
2 Depreciation Expenses $1,200,000
To Accumulated Deprecation-equipment $1,200,000
(Being depreciation expense is recorded)
3 No Journal Entry is required
