Impairment.
Presented below is information related to equipment owned by Porto Company at December 31, 2014. Assume that Porto will continue to use this asset in the future. As of December 31, 2014, the equipment has a remaining useful life of 4 years.

Instructions

(a) For Porto company, the recoverability test compares $______ to $______. As a result, the asset ______ the recoverability test, because ______ is/are less than ______ so a ______ on impairment is recorded in 2014.
(b) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2014.
(c) Prepare the journal entry to record depreciation expense for 2015.
(d) The fair value of the equipment at December 31, 2015 is $4,100,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

Question

Impairment.
Presented below is information related to equipment owned by Porto Company at December 31, 2014.  Assume that Porto will continue to use this asset in the future. As of December 31, 2014, the equipment has a remaining useful life of 4 years.

Instructions

(a) For Porto company, the recoverability test compares $______ to $______. As a result, the asset ______ the recoverability test, because ______ is/are less than ______ so a ______ on impairment is recorded in 2014.
(b) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2014.
(c) Prepare the journal entry to record depreciation expense for 2015.
(d) The fair value of the equipment at December 31, 2015 is $4,100,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

Quizplus · Accepted Answer

The Answer of Impairment.
Presented below is information related to equipment owned by Porto Company at December 31, 2014.  Assume that Porto will continue to use this asset in the future. As of December 31, 2014, the equipment has a remaining useful life of 4 years.

Instructions

(a) For Porto company, the recoverability test compares $______ to $______. As a result, the asset ______ the recoverability test, because ______ is/are less than ______ so a ______ on impairment is recorded in 2014.
(b) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2014.
(c) Prepare the journal entry to record depreciation expense for 2015.
(d) The fair value of the equipment at December 31, 2015 is $4,100,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

Impairment. Presented Below Is Information Related to Equipment Owned by Porto