Rohan Company purchased equipment in January 2008 for $8,000,000

Rohan Company purchased equipment in January 2008 for $8,000,000

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Rohan Company purchased equipment in January 2008 for $8,000,000 that had an estimated useful life of 6 years with a salvage value of $2,000,000.

Rohan Company purchased equipment in January 2008 for $8,000,000 that had an estimated useful lifeof 6 years with a salvage value of $2,000,000. At December 31, 2010, new technology was introducedthat would accelerate the obsolescence of Rohan’s equipmentRohan’s controller estimates thatexpected future net cash flows on the equipment will be $4,900,000 and that the fair value of theequipment is $4,600,000. Rohan intends to continue using the equipmentbut it is estimated that theremaining life is 2 years and new salvage value is $1,000,000. Rohan uses straight-line depreciation.

Required:

(a)    Prepare the journal entry (if anyto record the impairment at December 31, 2010.                   

(b)   Prepare any journal entries for the depreciation of the equipment at December 31, 2011.                                                                                                  

(c) Assume that Rohan used the double-declining balance method of depreciationprepare the journalentry (if anyto record the impairment at December 31, 2010.                                                      

(d)   Assume that Rohan used the double-declining balance method of depreciationprepare the journalentries for the depreciation of the equipment at December 31, 2011.  


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