On January 1, 2021, an impairment test was conducted by Radyowap 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.
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- On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.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.On 1st January 2019, Maali limited had an old machinery with a cost of Rwf 16,000 and accumulated depreciation of Rwf 5,000. An impairment loss of Rwf 1,000, had previous been provided. Depreciation charged provided per year is Rwf 1,100. On 31st December 2021, a revaluation was done that revealed a fair value of Rwf 9,600. Required: Based on requirement s of IAS 16 and 36, Discuss how impairment loss was treated Compute revaluation surplus and discuss how it was treated Discuss how gain on disposal and revaluation surplus balance should be treated upon de-recognition of the asset.
- On January 2, 2020, Quezon Inc. purchased equipment with a cost of P10,500,000, a useful life of 12 years and no salvage value. The Company uses sum-of-the-years-digit method of depreciation. At December 31, 2020 and December 31, 2021, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end: 12/31/20 Fair value less cost to sell P8,515,000 Value-in-use P8,551,000 12/31/21 Fair value less cost to sell P7,530,000 Value-in-use P7,315,000 There is no change in the asset’s useful life or salvage value. The 2021 income statement will report gain on recovery of?At 30 June 2019, there was an indication that Modern Machineries Ltd's machinery might be impaired. In preparing for the impairment testing, the accountants have estimated, as at 30 June 2019, the piece of machinery's fair value less costs of disposal to be $495,000 and its value in use to be $580,000. The machinery was purchased and installed on 1 October 2016 by $925,000, The machinery had an accumulated depreciation of $300,000 as on 30 June 2019. Modern Machineries Ltd uses the straight-line method of depreciation for this machinery. Required: Compute the impairment loss to be recorded at 30 June 2019? Journalize the required entries to record the impairment loss to be recorded at 30 June 2019?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 January 1, 2021, Bug Company purchased equipment with a cost of P10,440,000, a useful life of 10 years and no salvage value. The Company uses straight-line depreciation. At December 31, 2021 and December 31, 2022, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end: 12/31/2021 12/31/2022 Fair value less cost to sell P9,115,000 P8,850,000 Value-in-use P9,155,000 P8,815,000 There is a change in the asset’s useful life at the end of 2021 to 15 years from the date of acquisition. Which of the…On January 1, 2021, Bug Company purchased equipment with a cost of P10,440,000, a useful life of 10 years and no salvage value. The Company uses straight-line depreciation. At December 31, 2021 and December 31, 2022, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end: 12/31/2021 12/31/2022 Fair value less cost to sell P9,115,000 P8,850,000 Value-in-use P9,155,000 P8,815,000 There is a change in the asset's useful life at the end of 2021 to 15 years from the date of acquisition. Which of the following statements is (are) correct if Bug Company uses revaluation model to account for this asset? Statement 1: The balance of revaluation surplus at the end of 2022 is P348.929. Statement 2: A gain on recovery of P223,786 is reported in Bug's income statement for year ended December 31, 2022. Statement 3: The asset is reported as of December 31, 2022 at P8,724,857. a. Only statement 1 is…On January 1, 2020, Elite Company purchased equipment with a cost of P11,000,000, useful life of 10 years and no residual value. The entity used straight line depreciation. At every year-end, the entity determined that impairment indicators are present. There is no change in the useful life or residual value. The following information is available for impairment testing: December 31, 2020: Fair Value less Cost of Disposal - P8,100,000 Value in Use - P8,550,000 December 31, 2021 Fair Value less Cost of Disposal - P8,400,000 Value in Use - P8,200,000 1. What is the impairment loss for 2020? 2. What is the gain on reversal of impairment for 2021? 3. What is the depreciation for 2022?