Entity A is a listed company in Hong Kong. Entity A owns a plant that was originally purchased for $999,000 on 1 January 2020. The economic life is 9 years. On 31 December 2022, the plant was revalued to $987,000. The upward revaluation was recognised as other comprehensive incom and recorded in the revaluation reserve as a surplus. On 31 December 2023, the recoverable amount of the plant was estimated at only $424,000. REQUIRED: According to the accounting standards, prepare the relevant journal entries related to the impairment loss on 31 December 2023.
Entity A is a listed company in Hong Kong. Entity A owns a plant that was originally purchased for $999,000 on 1 January 2020. The economic life is 9 years. On 31 December 2022, the plant was revalued to $987,000. The upward revaluation was recognised as other comprehensive incom and recorded in the revaluation reserve as a surplus. On 31 December 2023, the recoverable amount of the plant was estimated at only $424,000. REQUIRED: According to the accounting standards, prepare the relevant journal entries related to the impairment loss on 31 December 2023.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter2: Asset And Liability Valuation And Income Recognition
Section: Chapter Questions
Problem 6QE
Related questions
Question
Fill according to the calendar dates in the journal entry section. Please put the date beside your answer.
Follow exactly according to the above journal entries, inputting answers to each and every one of the blanks.
Note:-
• Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
• Answer completely.
• You will get up vote for sure.
Transcribed Image Text:QUESTION 5
Entity A is a listed company in Hong Kong. Entity A owns a plant that was originally purchased for $999,000 on 1 January 2020. The
economic life is 9 years.
On 31 December 2022, the plant was revalued to $987,000. The upward revaluation was recognised as other comprehensive income
and recorded in the revaluation reserve as a surplus.
On 31 December 2023, the recoverable amount of the plant was estimated at only $424,000.
REQUIRED:
According to the accounting standards, prepare the relevant journal entries related to the impairment loss on 31 December 2023.
ACCOUNTS FOR INPUT:
| Plant | Motor van | Machine | Land | Building | Bank | Payable | Receivable | No entry |
| Retained earnings | Other income | Other expense |Interest expense | Interest revenue |
| Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss |
| Restoration liability | Loss on disposal | Gain on disposal | Revaluation surplus | Revaluation deficit |
| Reversal of revaluation surplus | Reversal of revaluation deficit |
ANSWERS:
Journal Entries:
Date
31-Dec-23
31-Dec-23
31-Dec-23
Account Name
Debit ($)
Credit ($)
Hints For Sequence
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