The equipments fair value increased

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The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $ 2,044,800 with depreciation to date of $ 908,800 as of December 31, 2014. On December 31, 2014, management projected its future net cash flows from this equipment to be $ 681,600 and its fair value to be $ 522,560 .The Company intends to use this equipment in the future.

a) Prepare the journal entry (if any) to record the impairment at December 31, 2014

b) At December 31, 2015, the equipment’s fair value increased to $590,720. Prepare the journal entry (if any) to record this increase in fair value.

Reference no: EM13827244

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