Presented below is information related to equipment owned by Cullumber Company at December 31, 2017.
Cost $4,680,000
Accumulated depreciation to date 468,000
Expected future net cash flows 3,120,000
Fair value 2,184,000
Assume that Cullumber will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years.
(a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017.
(b) Prepare the journal entry to record depreciation expense for 2018.
(c) The fair value of the equipment at December 31, 2018, is $5, 100,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

Answer and Explanation:

Before recording the journal entries first we need to find out the depreciation expense which is shown below:

Cost$4,680,000

Less: Accumulated Deprecation-equipment $468,000

Net Value$4,212,000

Less: Fair value$2,184,000

Loss on Impairment$2,028,000

And,

Fair value$2,184,000

Divide by Life4  years

So, Depreciation Expenses$546,000

Now the journal entry is

1Loss on Impairment$2,028,000

            To Accumulated Deprecation - equipment$2,028,000

(Being the loss on impairment is recorded)

2Depreciation Expenses$546,000

                To Accumulated Deprecation - equipment $546,000

(Being the depreciation expense is recorded)

3. No journal entry is required

answer; ///i believe the correct answer is(e) complementary to each other;

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total