The information that follows relates to equipment owned by Pearl Limited at
December 31, 2017:
Accumulated depreciation to date
980,000Expected future net cash flows (undiscounted)
6,860,000Expected future net cash flows (discounted, value in use)
6,076,000Costs to sell (costs of disposal)
Assume that Pearl will continue to use this asset in the future. As at December 31, 2017, the equipment has a remaining useful life of four years. Pearl uses the straight-line method of depreciation.
Assume that Pearl is a private company that follows ASPE.
Prepare the journal entry at December 31, 2017, to record asset impairment, if any.
Prepare the journal entry to record depreciation expense for 2018.3.
The equipment's fair value at December 31, 2018, is $6.37 million. Prepare the journal entry, if any, to record the increase in fair value.