Please answer the required part which is to prepare all indicated journal entries for 2020 and 2021. Please put the computations if needed. Thank you Problem 30-4 (AICPA Adapted), Cognac Company reported an impairment loss of P2,000,000 inthe income statement for the year ended December 31, 2020This loss was related to long-lived asset acquired on January 12019 with cost of P10,000,000, useful life of 10 years and no,residual value.On December 31, 2020, the entity reported the long-lived assetat P6,000,000 which is the fair value less cost of disposal onsuch date.On December 31, 2021, the entity determined that the fair valueless cost of disposal of the impaired long-lived asset hadincreased to P7,500,000. The straight line depreciation isrecorded for the impaired asset.Required:Prepare all indicated journal entries for 2020 and 2021.

The question is related to Impairment of Assets. Required Journal Entries for 2020 and 2021.

Problem 30-4 (AICPA Adapted) Cognac Company reported an impairment loss of P2,000,000 in the income statement for the year ended December 31, 2020 This loss was related to long-lived asset acquired on 2019 with cost of P10,000,000, useful life of 10 years and no January 1, residual value. On December 31, 2020, the entity reported the long-lived asset at P6,000,000 which is the fair value less cost of disposal on such date. On December 31, 2021, the entity determined that the fair value less cost of disposal of the impaired long-lived asset had increased to P7,500,000. The straight line depreciation is recorded for the impaired asset. Required: Prepare all indicated journal entries for 2020 and 2021.

Problem 30-4 (AICPA Adapted) Cognac Company reported an impairment loss of P2,000,000 in the income statement for the year ended December 31, 2020 This loss was related to long-lived asset acquired on 2019 with cost of P10,000,000, useful life of 10 years and no January 1, residual value. On December 31, 2020, the entity reported the long-lived asset at P6,000,000 which is the fair value less cost of disposal on such date. On December 31, 2021, the entity determined that the fair value less cost of disposal of the impaired long-lived asset had increased to P7,500,000. The straight line depreciation is recorded for the impaired asset. Required: Prepare all indicated journal entries for 2020 and 2021.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 5MC: During 2019, White Company determined that machinery previously depreciated over a 7-year life had a...

See similar textbooks

Similar questions

On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000
Albany Corporation purchased equipment at the beginning of Year 1 for 75,000. The asset does not have a residual value and is estimated to be in service for 8 years. Calculate the depreciation expense for Years 1 and 2 using the double-declining-balance method. Round to the nearest dollar.
24 On December 31, 2019, an equipment with a carrying amount of P6,500,000 (cost of P10,000,000 less accumulated depreciation of P3,500,000) was tested for impairment. An impairment loss of P1,250,000 was recognized and the basis is the recoverable amount which is the estimated fair value less costs to sell on this date. The equipment had a remaining useful life of 8 years and estimated residual value of P50,000. On December 31, 2022, there are indications that the impairment loss recognized in 2019 may be reversed. The value in use is based on estimated net cash flows of P1,000,000 every year (discount rate is 7%) while the asset is in use while the fair value was at P4,200,000 and costs to sell is estimated at P90,000. Which of the following statements is (are) correct? Statement 1: The asset is reported in the statement of financial position as of December 31, 2022 at P4,110,000. Statement 2: The income statement for the year ended December 31, 2022 shall report a gain on…
Ryan Company reported an impairment loss of P2,540,000 in its statement of comprehensive income for the year ended December 31, 2018. This loss was related to long-lived assets acquired on January 1, 2017 with cost of P10,000,000, useful life of 10 years and 200,000 residual value. On the December 31, 2018 statement of financial position, Ryan reported these long-lived assets at P5,500,000 which is the fair value on such date. On December 31, 2019, Ryan determined that the fair value of its impaired long-lived assets had increased to P6,700,000. The straight line depreciation is recorded for the impaired assets. Required: Depreciation expense for 2019. Please answer it complete using good accounting form. Thank you
MABC Company reported an impairment loss of P2,000,000 in 2020. This loss was related to an item of property, plant and equipment which was acquired on January 1, 2019 with cost of P10,000,000, useful life of 10 years and no residual value. On December 31, 2021, the entity determined that the fair value of the impaired asset had increased to P6,850,000. The straight line method is used in recording depreciation and uses cost model to account its property, plant and equipment. What amount of gain on reversal of impairment should be reported in the income statement for 2021?
36.The following data relate to a piece of equipment owned by Xyza Company, a calendar-year company. The company's policy is to depreciate its property, plant and equipment items to the nearest month.Acquisition date-July 1, 2020 Cost-P125,000 Estimated residual value–P5,000 Estimated service life–5 yearsWhat is the depreciation expense for the equipment for the year ended December 31, 2021 under the -(1) sum-of-the years' digits method and (2) double declining balance method. a. (1) 40,000 and (2) 50,000 b. (1) 36,000 and (2) 40,000 c. (1) 40,000 and (2) 48,000 d. (1) 40,000 and (2) 36,000
PUP CAF Company reported an impairment loss of P2,000,000 in 2020. This loss was related to an item of property, plant, and equipment which was acquired on January 1, 2019, with cost of P10,000,000, useful life of 10 years and no residual value. On December 31, 2021, the entity determined that the fair value of the impaired asset had increased to P6,850,000. The straight-line method is used in recording depreciation and uses a cost model to account for its property, plant, and equipment. What amount of gain on reversal of impairment should be reported in the income statement for 2021?
7. On January 1, 2018 an entity purchased for P4,800,000 machine with useful life of ten years on residual ofP200,000. The machine was depreciated by the double declining balance method. The entity changed to thestraight line method on January 1, 2020 and the residual value did not change. What is the accumulateddepreciation on December 31,2020?a. 2,087,000 c. 2.188,000b. 2,112,000 d. 2,015,200
3. On December 1, 2021, Violet Company committed to a plan to dispose of the assets of a business component. The disposal meets the requirements to be classified as discontinued operation. On that date, the entity estimated that the loss from the disposition of the assets would be P700,000 and the component’s operating income was P200,000. What amount of pretax loss should be reported for discontinued operation for 2021? A. 900,000 B. 700,000 C. 200,000 D. 500,000 E. None of them
On January 1, 2020, Joker Company purchased equipment with cost of P10,000,000, useful life of 10 years and no residual value. The entity used straight line depreciation. On December 31, 2020 and December 31, 2021, the entity determined that impairment indicators are present. The following information is available for impairment testing at each year end: December 31, 2020 December 31, 2021Fair value less cost of disposal 8,100,000 8,400,000Value in use 8,550,000 8,200,000 There is no change in useful life or residual value. What amount should be reported in the income statement for 2021?
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?
14. Selfless Company determined that, due to the obsolescence, equipment with an original cost of P180,000 and accumulated depreciation at January 1, 2014 of P84,000 had suffered permanent impairment, and as a result should have a 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, 2014 statement of financial position? 16. In January 2012, Ocean Corporation acquired a machinery at a cost of P1,000,000. Estimated salvage value of the machinery was P200,000 and useful life was estimated to be eight years under the straight line method of depreciation. In January 2014, Ocean had determined that there was a permanent impairment in the value of the machinery. Thus, the fair value of the said machinery is P350,000 and…