In 2022, Mao Li Corporation determined that a production machine used in its operations was impaired and an impairment loss of HK$110,000 was recognized. In 2023, the fair value of the asset increased by HK$170,000 due to an unexpected resurgence in demand for the products the machine was designed to produce. How would the gain due to increase in fair value be recognized in 2023 under IFRS?

In 2022, Mao Li Corporation determined that a production machine used in its operations was impaired and an impairment loss of HK$110,000 was recognized. In 2023, the fair value of the asset increased by HK$170,000 due to an unexpected resurgence in demand for the products the machine was designed to produce. How would the gain due to increase in fair value be recognized in 2023 under IFRS?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 66P: At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been...

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At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.
In 2022, Mao Li Corporation determined that a production machine used in its operations was impaired and an impairment loss of HK$110,000 was recognized. In 2023, the fair value of the asset increased by HK$170,000 due to an unexpected resurgence in demand for the products the machine was designed to produce. How would the gain due to increase in fair value be recognized in 2023 under IFRS? Group of answer choices IFRS does not permit recognition of gains on reversal of previous impairment loss write-downs. IFRS allows the recognition of this impairment reversal as either income from continuing operations or as other comprehensive income, depending upon management's intent. IFRS permits the recognition of this impairment reversal as income from continuing operations. IFRS permits the recognition of this impairment reversal as other comprehensive income.
In 2016, Bambung Corporation acquired production machinery at a cost of £420,000. In 2019, when accumulated depreciation was £103,000, Bambung reported an impairment loss of £77,000. Now, in 2023, the machinery has a book value of £193,000. The fair value less costs to sell of the machinery is £215,000 and its value in use is £192,000. During impairment testing, Bambung recognized the possibility of a reversal of the previous impairment loss. What amount, if any, should Bambung recognize as a reversal of impairment loss under IFRS? Group of answer choices -0- £77,000 £1000 £22,000
Shellfish Company determined that, due to the obsolescence, equipment with an original cost of P180,000 and accumulated depreciation at January 1, 2020 of P84,000 had suffered permanent impairment, and as a result should have fair value of only P60,000 as of the beginning of the year. Additionally, the remaining useful life of the equipment was reduced from eight years to three years. If the company’s policy is to credit accumulated depreciation when a PPE is impaired, how much should selfless report as accumulated depreciation in its December 31, 2020 statement of financial position?
General Motors. In 2020, their Goodwill was 5230 and in 2021 it was 5087. Their goodwill is not amortized but tested for impairment annually. The testing determines whether it is more likely than not that an impairment exists. If it doesn’t exist then they do a quantitative impairment test, which carries out the amount of reporting of the amount of the unit exceeding its fair value. Goodwill on a balance sheet is the intangible assets that is created when a company acquires another company for a price more than its net asset value (Hargrave, 2022). I don’t feel they disclosed enough information for others to know about their goodwill. Their goodwill and intangible assets, net decreased from 2020 to 2021 which is the sum of the carrying amounts of the intangible assets on the balance sheet, net of the accumulated amortization and impairment charges. Do you agree? Please explain.
On March 1, 2022 Tulip purchased for P400,000 a trademark for a very successful soft drink it markets under the name PowPow! The trademark was determined to have an indefinite life. A competitor recently introduced a product that is in direct competition with the PowPow! product, thus suggesting the need for an impairment test. Data gathered by the entity suggests that the useful life of the trademark is still indefinite, but the cash flows expected to be generated by the trademark have been reduced either to P22,000 per year (with a probability of 60%) or to P33,000 per year (with 40% probability). The appropriate risk-free interest rate is 7%. The appropriate risk-adjusted interest rate is 12%. What is the carrying value of trademark as of December 31, 2022? Group of answer choices P377,143 P400,000 P368,291 P397,291
On January 1, 2021, an impairment test was conducted by Jess Co. on its Radio Equipment which has an original cost of P1,000,000.00 and an accumulated depreciation in the amount of P300,000.00. Following this, it discovered that said Equipment had a fair value less cost to sell in the amount of P150,000.00 and a value in use in the amount of P300,000.00. Determine the Impairment Loss to be recognized on January 1, 2021.
In 2015, Mennorah Corporation acquired production machinery at a cost of $490,000, which now has a book value of $190,000. The sum of undiscounted future cash flows from use of the machinery is $180,000. and it's fair value is $120,000. What amount should Mennorah recognize as a loss on impairment?
Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?
In 2016, TallyHo Farms acquired production machinery at a cost of £430,000. In 2019, when accumulated depreciation was £180,000, Bambung reported an impairment loss of £78,000. Now, in 2023, the machinery has a book value of £142,000. The fair value less selling costs of the machinery is £273,000 and its value in use is £215,000. During impairment testing, Bambung recognized the possibility of a reversal of the previous impairment loss. What amount, if any, should Bambung recognize as a reversal of impairment loss under IFRS? Group of answer choices £58,000 £131,000 £73,000 £78,000 PreviousNext
On December 31, 2020, ABC Company has an item of machinery with a cost of P 4,500,000 and an accumulated depreciation of P 1,800,000. On this date, the machinery is found to be impaired due to obsolescence and a major physical damage. The entity made an assessment and test for recoverability of the asset and determined that the machinery's estimated selling price is P 2,500,000 and estimated disposal cost is P 250,000. The entity expects net future undiscounted cash flows related to the continued use and eventual disposal of the machinery of P 2,600,000. The net future discount cashflows related to the continued use and eventual disposal of the machinery using a discount rate of 10% is P 2,180,000. ABC should report an impairment loss in 2020 of?
On December 1, 2018, Joy Corporation decided to dispose of an item of plant that is carried in its records at a cost of P450,000, with accumulated depreciation of P80,000. Depreciation on the plant since it was originally acquired has been charged at P5,000 per month. The company undertook all the necessary actions to be able to classify the asset as held for sale. It is estimated that it could sell the plant for its fair value, P350,000, incurring P10,000 selling costs in the process. On December 31, 2018, the plant had not been sold but, due to a shortage of this type of plant, there had been an increase in the fair value to P360,000 while expected costs to sell remain at P10,000. Case 1: Any gain on the subsequent increase in the fair value less cost to sell of a noncurrent asset classified as held for sale should be treated as follows: a. The gain should be recognized in full. b. The gain should not be recognized. c. The gain should…