The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2020: $11,160,000 1,240,000 8,680,000 7,874,000 7,688,000 62,000 Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell (costs of disposal) Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Sweet Acacia uses the straight-line method of depreciation. Assume that Sweet Acacia is a private company that follows ASPE. 1. 2. Your answer is correct. 3. Prepare the journal entry at December 31, 2020, to record asset impairment, if any. Prepare the journal entry to record depreciation expense for 2021. The equipment's fair value at December 31, 2021 is $8.06 million. Prepare the journal entry, if any, to record the increase in fair value. Your answer is partially correct. Repeat the requirements in (a) above assuming that Sweet Acacia is a public company that follows IFRS. (Credit count titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"f the account titles and enter o for the amounts.) Date Account Titles and Explanation December Loss on Impairment 31, 2020 December 31, 2021 December 31, 2021 Accumulated Impairment Losses - Equipment Depreciation Expense Accumulated Depreciation - Equipment Equipment Recovery of Loss from Impairment Debit Credit
The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2020: $11,160,000 1,240,000 8,680,000 7,874,000 7,688,000 62,000 Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell (costs of disposal) Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Sweet Acacia uses the straight-line method of depreciation. Assume that Sweet Acacia is a private company that follows ASPE. 1. 2. Your answer is correct. 3. Prepare the journal entry at December 31, 2020, to record asset impairment, if any. Prepare the journal entry to record depreciation expense for 2021. The equipment's fair value at December 31, 2021 is $8.06 million. Prepare the journal entry, if any, to record the increase in fair value. Your answer is partially correct. Repeat the requirements in (a) above assuming that Sweet Acacia is a public company that follows IFRS. (Credit count titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"f the account titles and enter o for the amounts.) Date Account Titles and Explanation December Loss on Impairment 31, 2020 December 31, 2021 December 31, 2021 Accumulated Impairment Losses - Equipment Depreciation Expense Accumulated Depreciation - Equipment Equipment Recovery of Loss from Impairment Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
am.106.
Transcribed Image Text:The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2020:
$11,160,000
1,240,000
8,680,000
7,874,000
7,688,000
62,000
Cost
Accumulated depreciation to date
Expected future net cash flows (undiscounted)
Expected future net cash flows (discounted, value in use)
Fair value
Costs to sell (costs of disposal)
Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining
useful life of four years. Sweet Acacia uses the straight-line method of depreciation.
Assume that Sweet Acacia is a private company that follows ASPE.
1.
2.
Your answer is correct.
3.
Prepare the journal entry at December 31, 2020, to record asset impairment, if any.
Prepare the journal entry to record depreciation expense for 2021.
The equipment's fair value at December 31, 2021 is $8.06 million. Prepare the journal entry, if any, to record the
increase in fair value.
Your answer is partially correct.
Repeat the requirements in (a) above assuming that Sweet Acacia is a public company that follows IFRS. (Credit count titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"f the account
titles and enter o for the amounts.)
Date Account Titles and Explanation
December
Loss on Impairment
31, 2020
December
31, 2021
December
31, 2021
Accumulated Impairment Losses - Equipment
Depreciation Expense
Accumulated Depreciation - Equipment
Equipment
Recovery of Loss from Impairment
Debit
Credit
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