Reference no: EM133085088

Question - Presented below is information related to equipment owned by Whispering Company at December 31, 2020.

Cost $9,990,000

Accumulated depreciation to date 1,110,000

Expected future net cash flows 7,770,000

Fair value 5,328,000

Assume that Whispering will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years.

Part 1 - Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020.

Part 2 - Prepare the journal entry to record depreciation expense for 2021.

Part 3 - The fair value of the equipment at December 31, 2021, is $5,661,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

Part 4 - Sunland Corporation acquires a coal mine at a cost of $452,000. Intangible development costs total $113,000. After extraction has occurred, Sunland must restore the property (estimated fair value of the obligation is $90,400), after which it can be sold for $180,800. Sunland estimates that 4,520 tons of coal can be extracted. If 791 tons are extracted the first year, prepare the journal entry to record depletion.