At 1 July 2020, Flamingo Ltd acquired computer equipment at a cost of $900,000. The expected useful life of equipment was 5 years with no residual value. At 30 June 2021, the fair value of equipment was assessed. The equipment had a fair value of $820 000, and directors decided to adopt the revaluation method. The remaining useful life was also assessed to be 4 years for equipment. At 30 June 2022, the fair value of equipment was assessed to be $500 000. Required: Prepare the journal entries for Flamingo Ltd for the years ending 30 June 2021 and 2022.
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At 1 July 2020, Flamingo Ltd acquired computer equipment at a cost of $900,000. The expected useful life of equipment was 5 years with no residual value. At 30 June 2021, the fair value of equipment was assessed. The equipment had a fair value of $820 000, and directors decided to adopt the revaluation method. The remaining useful life was also assessed to be 4 years for equipment.
At 30 June 2022, the fair value of equipment was assessed to be $500 000.
Required:
Prepare the
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- 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- £1000 £22,000 £77,000On 30 June 2020, James Ltd acquired a machine for $200 500 cash, with an expected useful life of ten years and a zero residual value. The company has adopted fair value for the valuation of non-current assets. On 30 June 2021, the company hired an independent valuer who assessed the value of the machine to be $185 000 with a remaining useful life of 8 years and residual value of $5 000. On 30 June 2022, the fair value of the machine is $150 000 with a remaining useful life of 6 years and zero residual value. The company uses straight-line depreciation method for depreciating all its property, plant and equipment. Income tax rate is 30%. The financial year ends on 30 June. Required Prepare all the necessary journal entries related to the machine from 30 June 2020 to 30 June 2022.On 1 January 2019, Metsi Limited purchased a plant for R1 500 000 cash. The plant was immediately available for use. It was determined that the plant needs to be dismantled at an estimated cost of R250 000 at the end of its useful life of five years. Assume all criteria for the recognition of the dismantling provision has been met and that it is not used to produce inventories. A fair discount rate of 10% per annum (pre-tax) is applicable. The plant has no residual value and Metsi Limited uses the straight-line method to calculate depreciation. Calculate the depreciation expense recognised in the current financial year ending 31 December 2019. a. R350 000 b. R300 000 c. R331 046 d. R335 318
- Balloon Ltd (Balloon) purchased an item of equipment on 1 July 2015 for $2 million. At that time the useful life of the equipment was assessed to be 10 years, with no residual value. Balloon applies the revaluation model to its equipment. On 30 June 2020 the carrying amount of the equipment was $1 million and the fair value of the equipment was assessed to be $1,100,000. Accordingly, a revaluation gain of $100,000 was recognised. The useful life of the equipment remained at five years. The same equipment is up for revaluation again on 30 June 2023 (three years later) and its fair value is assessed to be $400,000. an impairment loss of $40,000 O an impairment loss of $30,000 O $0 of impairment loss O an impairment reversal of $30,000On 1 October 2019, company X (with a year-end as at 30th Sept) acquired an item of machinery for£10,720. During the year, the machinery had got damaged and was underperforming, although it was stillbeing used. By 30 September 2020, following the damage, the item of machinery had an estimatedremaining useful life of two years, a value in use of £6,300 and a fair value of £6,400. The costs to sell theitem of machinery amounted to £500. Company X depreciates machinery on a reducing balance basis ata rate of 20% per annum.Compute the impairment loss in relation to the aforementioned item of machinery to be shown in companyX’s income statement for the year ending 30th September 2020.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
- Balloon Ltd (Balloon) purchased an item of equipment on 1 July 2015 for $2 million. At that time the useful life of the equipment was assessed to be 10 years, with no residual value. Balloon applies the cost model to its equipment. On 30 June 2020 the recoverable amount of the equipment was assessed to be $900,000. Accordingly, an impairment loss of $100,000 was recognised. The useful life of the equipment remained at five years. On 30 June 2023 (three years later) the same equipment's carrying amount is $360,000 and its recoverable amount is $450,000. On 30 June 2023, Balloon should recognise: an impairment reversal of $10,000 an impairment reversal of $90,000 an impairment reversal of $40,000 O nil, because the recoverable amount of the asset exceeds its carrying amountErase Ltd adopts the revaluation model for measuring equipment. In the previous year’s revaluation (30 June 2021), equipment A was decreased by $5,000 to bring it to a fair value of $80,000. Equipment A had a remaining useful life of 5 years and a residual value of $2,000 after this revaluation. On 30 June 2022, and prior to recording depreciation for the year, Erase Ltd obtained a fair value for equipment A at $75,000. The company uses straight-line depreciation, the reporting period ends 30 June, and the tax rate is 30%. Required: Prepare all necessary journal entries for equipment A on 30 June 2022. Show all calculations.Bold Ltd purchased machinery on 1 January 2021 at a cast of R1 200 000. A major inspection has to be carried out on the machinery every three years. The last inspection performed on the machine was on 31 December 2020 by the selle and the inspection costs were included in the purchase price. On the acquisition date, the present value of future expected inspection costs to be incurred was estimated at an amount of R240 000. On the acquisition date the estimated useful life of 10 years was allocated to the machine. The inspection component is part of the machine and not a separate asset The carrying amount of the machinery (including the inspection component) for the year ended 31 December 2021 1. R1 124 000 O2 R1 000 000 O3 R1 056 000 4. R1 024 000
- Electrolux Group. has decided to close its oil and gas operations in Aberdeen on 1 March 2020 but retain the warehouse from which the operations were carried out as an investment property. The warehouse had a net book value at 30 September 2019 of £6.8m and a fair value of £7.2m at 1 March 2020. At the company's year end of 30 September 2020, the fair value of the warehouse was £8.0m. Assuming Electrolux group policy is to value investment property at fair value, the amount that the company would include in in the income statement for the year ended 30 September 2020 would be: O a. Debit £0.5m O b. Debit £0.4m O c. Credit £1.2m O d. Credit £0.8mOn 1 January 2019, ABC, Inc. decided to replace its existing machinery which it had acquired on 1 January 2016 for P40 million and initiated process for acquisition of new machinery. Simultaneously, it also initiated efforts to sell of the old machinery. The new machinery was commissioned on 30 March 2019. The company depreciates machinery assuming a zero residual value and 5-year total useful life. The carrying value of old machinery as at 1 January 2019 worked out to P16 million. If the fair value of the old machinery is P12 million and it would cost 10% of the sale proceeds to close the deal, find out when the company should classify the machinery as held-for-sale. How much is the loss/gain on classification of the old machinery as held for sale? What is the journal entry to record the reclassification? How much is the total depreciation expense to be recognized for 2019? What is the journal entry to record the depreciation expense, if there is?On 1 January 2019, ABC, Inc. decided to replace its existing machinery which it had acquired on 1 January 2016 for P40 million and initiated process for acquisition of new machinery. Simultaneously, it also initiated efforts to sell of the old machinery. The new machinery was commissioned on 30 March 2019. The company depreciates machinery assuming a zero residual value and 5-year total useful life. The carrying value of old machinery as at 1 January 2019 worked out to P16 million. If the fair value of the old machinery is P12 million and it would cost 10% of the sale proceeds to close the deal, find out when the company should classify the machinery as held-for-sale. 1.) What is the journal entry to record the reclassification? 2.) How much is the total depreciation expense to be recognized for 2019?