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Presented below is information related to equipment owned by ALALI Company at December 31, 2010.
Cost SAR 7,000,000
Accumulated depreciation to date 1,500,000
Value-in-use 5,000,000
Fair value less cost of disposal 4,400,000
Assume that ALALI will continue to use this asset in the future. As of December 31, 2010, the equipment has a remaining useful of 4 years.
Instructions
Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2010.
Prepare the journal entry to record depreciation expense for 2011.
The recoverable amount of the equipment at December 31, 2011, is SAR 5,250,000. Prepare the journal entry (if any) necessary to record this increase.
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