Assume the same information as in IFRS11.11, except that Pujols intends to dispose of the equipment in the coming year.

Cost (residual value $0)..............................$9,000,000
Accumulated depreciation to date..............1,000,000
Value-in-use...................................................5,500,000
Fair value less cost of disposal....................4,400,000

Instructions

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

b. Prepare the journal entry (if any) to record depreciation expense for 2021.

c. The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $5,100,000. Prepare the journal entry (if any) necessary to record this increase. It is expected that the cost of disposal is $20,000.