4. During December 20x3, BubBa Ih been a significant decrease in the value of its equipment used in its manufacturing process. At December 31, 20x3, Bubba compiled the information below. Original cost of the equipment Accumulated depreciation Present value of expected net future cash inflows had 500,000 300,000 related to the continued use and eventual disposal of the equipment Fair value less costs of disposal of the equipment 175,000 125,000 What is the amount of impairment loss that should be reported on Bubba's income statement prepared for the ended December 31, 20х3? year
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- The company provided the data of PP&E in a cash-generating unit (CGU) as follows: Cost Accumulated Depreciation Equipment A $ 15,000 $ 8,000 Equipment B 30,000 19,000 Equipment C 45,000 23,000 The unit’s fair value less costs to sell was $25,000. The unit’s future cash flows was $32,000, and its present value was $28,000. The company adopted IFRS. Prepare journal entries to record impairment. If the recoverable amount of Equipment C is $19,000, prepare journal entries to record impairment. If the recoverable amount of Equipment C is $24,000, prepare journal entries to record impairment.3. ABC Company had purchased equipment for P10,000,000, on January 1, 20X1. The equipment had a 5-year life and a salvage value of 10%. ABC Company depreciated the equipment using the straight-line method. On December 31, 20X3, ABC had doubts on the recoverability of the carrying amount of this equipment. On December 31, 20X3, the undiscounted expected net future cash inflows related to the continued use and eventual disposal of the equipment totaled P5,000,000. The equipment’s fair value on December 31, 20X3 is P4,500,000. After any loss on impairment has been recognized, what is the carrying amount of the equipment?ABC is testing a store branch for impairment. The assets of thebranch include a building with a carrying amount of P4,000,000,equipment of P3,000,000, inventory of P2,000,000 and goodwill ofP500,000. The fair value less cost to dispose of the inventory is P2,500,000.The expected cashflows from the branch are: Year Amount1 P 2,000,0002 1,700,0003 1,500,0004 1,500,0005 1,300,000 The effective interest rate is 9%. The present value of the cashflowsbeyond year 5 is estimated to be at P400,000. 10. Value in use of the store branch11. Total Impairment Loss12. Carrying value of the building after impairment13. Carrying value of the inventory after impairment14. Carrying value of the goodwill after impairment
- In January 2012, Winn Corp. purchased equipment at a cost of $500,000. The equipment had an estimated salvage value of $100,000, an estimated 8-year useful life, and was being depreciated by the straight-line method. Two years later, it became apparent to Winn that this equipment suffered a permanent impairment of value. In January 2014, management of Winn Corp. determines the expected future net cash flows (undiscounted) from the use of the equipment and its eventual disposal to be $250,000 and a fair value of $225,000. What is the impairment loss for the equipment?Robert Sporting Goods Company has another piece of equipment (Q102) with the following cost and accumulated depreciation at its year ended December 31, 2020: Equipment (Q102) $9 000 000 Accumulated Depreciation 3 000 000 Due to obsolescence and physical damage, the equipment was found to be impaired. At the year-end Robert Sporting Goods Company had determined the following information: Fair value less cost of Disposal $4 500 000 Value in use or discounted net cash flows 4 000 000 Undiscounted net cash flows 5 500 000 Required: Assess equipment (Q102) for impairment and prepare the journal entry (if necessary) to report any impairment loss for the year. When selecting from dropdown lists, if a line…Robert Sporting Goods Company has another piece of equipment (Q102) with the following cost and accumulated depreciation at its year ended December 31, 2020: Equipment (Q102) $9 000 000 Accumulated Depreciation 3 000 000 Due to obsolescence and physical damage, the equipment was found to be impaired. At the year-end Robert Sporting Goods Company had determined the following information: Fair value less cost of Disposal $4 500 000 Value in use or discounted net cash flows 4 000 000 Undiscounted net cash flows 5 500 000 Required: Assess equipment (Q102) for impairment and prepare the journal entry (if necessary) to report any impairment loss for the year. When selecting from dropdown lists, if a line…
- Company’s reported current year profit is Rs. 70000 after incorporating the following:ParticularsAmountParticularsAmount Loss on Sale of Equipment9000Gain from sale of Assets40000 Premium on Redemption of Debentures1500Provision for Tax22000 Discount on issue of Debentures2000Dividend Income4000 Depreciation on Machinery20000Transfer to General Reserve5000 Depletion of Natural Resources10000Preliminary Expenses1000 Interim Dividend25000Profit on Revaluation2500 Loss on sale of Investment1000 Find out the Funds from Operations.At December 31, 2022, Ayayai Corporation reported the following plant assets. Land $ 3,003,000 Buildings $26,510,000 Less: Accumulated depreciation—buildings 11,936,925 14,573,075 Equipment 40,040,000 Less: Accumulated depreciation—equipment 5,005,000 35,035,000 Total plant assets $52,611,075 During 2023, the following selected cash transactions occurred. Apr. 1 Purchased land for $2,202,200. May 1 Sold equipment that cost $600,600 when purchased on January 1, 2016. The equipment was sold for $170,170. June 1 Sold land for $1,601,600. The land cost $1,001,000. July 1 Purchased equipment for $1,101,100. Dec. 31 Retired equipment that cost $700,700 when purchased on December 31, 2013. No salvage value was received. Journalize the transactions. Ayayai uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage…On 1/1/X2, Hudson Enterprises decided to sell equipment it had been using in its business for $25,000 cash. The following data are available for the equipment as of the disposal date: Cost $200,000 Original estimated residual value 25,000 Accumulated Depreciation as of 12/31/X1 160,000 Question: How much gain or loss should be recorded on the sale of this asset?Answer: The company should report a _____ (gain or loss) of $ ___
- On January 1, 2021, Bambi Ltd. purchased equipment for $728,000. The equipment was assumed to have an 8-year useful life and no residual value and was to be depreciated using the straight-line method. On January 1, 2023, Bambi's management became concernedthat the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $523,250, the discounted future net cash flows was $464,100, and the current fair value of the equipment less cost ofdisposal (of $1,800 ) was $455,000. (a)Assuming that Bambi is a private Canadian company following ASPE, identify which model should be used to test for impairment. b) Record the journal entry to record the impairment loss, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and…On January 1, 2021, Bambi Ltd. purchased equipment for $728,000. The equipment was assumed to have an 8-year useful life and no residual value and was to be depreciated using the straight-line method. On January 1, 2023, Bambi's management became concernedthat the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $523,250, the discounted future net cash flows was $464,100, and the current fair value of the equipment less cost ofdisposal (of $1,800 ) was $455,000. c) Assuming that Bambi is a public Canadian company, identify which model should be used to test for impairment. d) Record the journal entry to record the impairment loss, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit…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 $900,000 with depreciation to date of $400,000 as of December 31, 2020. On December 31, 2020, management projected its future net cash flows from this equipment to be $300,000 and its fair value to be $230,000. The company intends to use this equipment in the future. d. What accounting issues did management face in accounting for this impairment?