Answer:
Consider the following calculations
Explanation:
Answer:(a) Carrying value of asset: $10,000,000 - $2,500,000 = $7,500,000.
($10,000,000 ÷ 8) x 2 = $2,500,000
Future cash flows $6,300,000
Carrying value $7,500,000
Impairment entry:
Loss on Impairment A/C Dr. $1,900,000
To Accumulated Depreciation A/C $ 1,900,000
(7,500,000 - 5,600,000 = 1,900,000)
(b) Depreciation Expense A/C Dr. $ 1,400,000
To Accumulated Depreciation A/C $ 1,400,000
($5600000/4=$1400000)
(c ) No depreciation is recorded on impaired assets to be disposed of.
Recovery of impairment losses are recorded.
Loss on Impairment A/c Dr. $1,900,000
To Accumulated Depreciation A/C $ 1,900,000
12/31/2015 Accumulated Depreciation A/C Dr. $ 300,000
To Recovery of Impairment Loss A/C $ 300,000
