Brioche Incorporated is a private company that uses IFRS for financial reporting. The company acquired equipment for $107,000 on 1 January 20X1. At acquisition, Brioche estimated the equipment would have a useful life of 10 years. The residual value was estimated at $7,700. Brioche Incorporated recorded depreciation on the equipment for 4 years using straight-line depreciation. During this period, the equipment had been used with less intensity than anticipated due to unforeseen cash flow which allowed for the purchase of additional equipment which was used to share the load. At the 20X5 reporting date, before recording the annual adjusting entry for depreciation expense, Brioche re-evaluated the estimates concerning this equipment and determined that the original useful life should have been estimated at 12 years and that the residual value is actually $9,800.

Brioche Incorporated is a private company that uses IFRS for financial reporting. The company acquired equipment for $107,000 on 1 January 20X1. At acquisition, Brioche estimated the equipment would have a useful life of 10 years. The residual value was estimated at $7,700. Brioche Incorporated recorded depreciation on the equipment for 4 years using straight-line depreciation. During this period, the equipment had been used with less intensity than anticipated due to unforeseen cash flow which allowed for the purchase of additional equipment which was used to share the load. At the 20X5 reporting date, before recording the annual adjusting entry for depreciation expense, Brioche re-evaluated the estimates concerning this equipment and determined that the original useful life should have been estimated at 12 years and that the residual value is actually $9,800.

Name: Brioche Incorporated is a private company that uses IFRS for financia
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Brioche Incorporated is a private company that uses IFRS for financial reporting. The company acquired equipment for $107,000 on 1January 20X1. At acquisition, Brioche estimated the equipment would have a useful life of 10 years. The residual value

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Trotman Company had three intangible assets at the end of the current year: Computer software and…

A: Solution Balance sheet is the company financial statement in which assets and liabilities of a…

Q: Plummer Industries purchased a machine for $43,800 and is depreciating it with the…

A: Given: Cost of machine purchased = $ 43,800 Depreciation life = 8 years Residual value = $ 3,000…

Q: Required: 1. Prepare the journal entry to record the purchase. 2. Prepare the year end adjusting…

A: Elimination Method: Under this method, we eliminate accumulated deprecation from Machine A/c and…

Q: WebHelper Inc. acquired 100% of the outstanding stock of Silicon Chips Corporation (SCC) for $47.0…

A: The impairment loss is recorded when the fair value of the asset is less than the carrying value.…

Q: Bailand Company purchased a building for $366,000 that had an estimated residual value of $16,000…

A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…

Q: immer Company owns an executive plane that originally cost $1,792,000. It has recorded straight‑line…

A: Depreciation: Decreasing value of fixed assets over its useful life period.

Q: Bluestone Company had three intangible assets at the end of the current year: A patent purchased…

A: Assets that generate benefits for an entity but doesn’t have any physical existence are called…

Q: PILAK Mining Company has a copper mine in Marinduque. The company is subject to the pronouncements…

A: Journal: It is the first step of recording financial transactions. It is used to prepare the…

Q: Roxanne Co. purchased equipment for P500,000. The equipment had an estimated 10-year service life.…

A: Depreciation rate = Straight line depreciation rate x 150% = (100/10 years) x 150% = 15%

Q: On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the…

A: Step 1: Introduction to the Asset Disposal:Asset disposal is the process of selling of fixed asset…

Q: (1) cumulative depreciation expense and (2) net book value of the plane? (1) Cumulative depreciation…

A: Given Original cost = $1536000 Salvage value =$192000 Life of asset =10 years Hence straight line…

Q: ool Company owns an equipment costing P5,200,000 with original residual value of P400,000. The life…

A: solution given Cost 5200000 Original residual value 400000 Useful life 10 years…

Q: 22 Tolbert Company purchased equipment on January 1, 2011 for $60,000. It is estimated that the…

A: Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: At the beginning of last year, Bratworth Corporation purchased a piece of heavyequipment for…

A: Answer : D- $23,760 $24,300 Straight line depreciation is the predominant method of computing…

Q: On January 1, year 1 ABC. Ltd. had a piece of equipment with a cost of $ 150000 and accumulated…

A: Depreciation means the amount of normal wear or tear of the assets due to usage or passage of time.…

Q: On January 1, 2010, Woodstock, Inc. purchased a machine costing $41,000. The expected useful life of…

A: This is incorrect because the net property, plant, and equipment (PPE) balance at December 31,…

Q: The Donut Stop acquired equipment for $26,000. The company uses straight-line depreciation and…

A: Step 1. Calculate the Original Depreciation Expense (Year 1 and 2)Given:Cost: $26,000Residual Value:…

Q: Marigold Corp. applies revaluation accounting to plant assets with a carrying value of $1650000, a…

A: The depreciation expense refers to the reduction in the value of fixed assets due to the use of that…

Q: On January 2, 2003, the Jackson Company purchased equipment to be used in its manufacturing process.…

A: Equipment cost = purchase price + Freight charges + Installation charges…

Q: For each of the independent situations, prepare all the journal entries relating to the building for…

A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to…

Q: Bluestone Company had three intangible assets at the end of the current year: A patent purchased…

A: Intangible Assets According to IAS 38 which specifies the standards for identifying and valuing…

Q: Equipment was acquired at the beginning of the year at a cost of $625,000. The equipment was…

A: Depreciation is the loss in the value of the asset caused due to its usage, wear and tear.There are…

Q: Bailand Company purchased a building for $286,000 that had an estimated residual value of $6,000 and…

A: The objective of the question is to calculate the depreciation expense for the fifth year after the…

Q: Bailand Company purchased a building for $218,000 that had an estimated residual value of $8,000 and…

A: Depreciation needs to be charged to books for the normal usage of the asset during the estimated…

Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

Brioche Incorporated is a private company that uses IFRS for financial reporting. The company acquired equipment for $107,000 on 1
January 20X1. At acquisition, Brioche estimated the equipment would have a useful life of 10 years. The residual value was estimated
at $7,700. Brioche Incorporated recorded depreciation on the equipment for 4 years using straight-line depreciation. During this
period, the equipment had been used with less intensity than anticipated due to unforeseen cash flow which allowed for the purchase
of additional equipment which was used to share the load. At the 20x5 reporting date, before recording the annual adjusting entry for
depreciation expense, Brioche re-evaluated the estimates concerning this equipment and determined that the original useful life
should have been estimated at 12 years and that the residual value is actually $9,800.
Required:
1. This part of the question is not part of your Connect assignment.
2. Whether any adjustment is needed for 20X1 to 20X4 for the incorrect depreciation recorded.
Yes
O No
3-a. Calculate annual depreciation expense for 20X5.
Annual depreciation expense
Show Transcribed Text
3-b. Provide the required entry for annual depreciation expense for 20X5.
View transaction list
Journal entry worksheet
<
1
Description
Note: Enter debits before credits.
Date
20X5
Record entry
General Journal
3
Clear entry
Debit
Credit
View general journal

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Calculation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A company used straight-line depreciation for equipment that cost $12,000, had a salvage value of $2,000, and a 5-year useful life. At the beginning of year 4 of its useful life, the estimate of the salvage value was reduced to $1,200 and its total useful life was increased to 6 years. The amount of depreciation that will be recorded during each of the remaining years of its useful life is: $2,000 $6,000 $1,600 $2,400
Smith Company is an IFRS reporter. After 3 full years of use, the Smith Company revalues equipment with a carrying value of $970,000 to its fair value of $1,190,000 using the accumulated depreciation elimination method. The original cost of the equipment is $1,390,000 and the equipment has a useful life of 10 years with no scrap value. Smith depreciates under the straight-line method. What is the new carrying value of the asset? Group of answer choices $970,000 $1,390,000 $1,110,000 $1,190,000
A company purchased a piece of equipment for $120,000 and estimated that the asset will have no salvage value t the end of its 15-year useful life. At the end of Year 5 of ownership, when accumulated depreciation was $40,000 and the asset's book value was $80,000, the company revised the asset's estimated useful life to a total of 10 years. What is the appropriate accounting treatment beginning with Year 6? O The equipment will depreciate $40,000 over the next 10 years. O The equipment will depreciate $80,000 over the next 10 years. O The equipment will depreciate $40,000 over the next five years. O The equipment will depreciate $80,000 over the next five years.
Gates Inc., a calendar year firm, currently uses a plant asset in operations that originally cost $110,000 and has a useful life of eight years and a $10,000 residual value. Gates uses the straight line depreciation method. As an impairment indicator was present, Gates reviewed the asset for impairment. At January 1 of the current year, which is the beginning of the asset's third year of useful life, total remaining cash inflows attributable to the asset are estimated to be $120,000, while total cash outflows in running and maintaining the machine are estimated to be $65,000, Based on quoted prices and the condition of the asset, Gates estimates the fair value of the asset to be $40.000. The cost to sell the asset is approximately $5,000. Gates plans to continue to use the asset in production, although at a much lower rate of utilization. Required a. Record the impairment loss on January 1 of the current year, Date Jan 1 Account Name Date Dec 31 To record met Dr. b. Record depreciation…
On January 1, 20x6, the Bronze Co. purchased equipment for P300,000. The equipment was being depreciated over an estimated life of 10 years on the straight-line method, with no estimated residual value. On December 31, 20x9, the equipment was sold for P200,000. The historical cost/constant peso statement of profit or loss prepared for the year ended December 31, 20x9 should include how much gain or loss from this sale? *
Several years ago, a company acquired an asset at a cost of $400,000. Last year, the company recognized an impairment loss of $25,000 and properly reduced the asset's book value from $250,000 to $225,000. Using the asset's new base of $225,000, the company calculates depreciation for the current year to be $10,000, bringing the book value down to $215,000. However, the company has also determined that the asset's fair value has recovered and is now estimated to be $260,000. How should the company measure the asset on its current balance sheet? O The company should reverse the prior impairment and measure the asset at its fair value prior to the initial impairment of $250,000. O The company should not reverse the impairment and should depreciate the asset by $10,000 to a new book value of $215,000. The company should not reverse the impairment and should not depreciate the asset further, leaving the book value at $225,000. O The company should reverse the prior impairment and measure…
The Donut Stop acquired equipment for $18,000. The company uses straight-line depreciation and estimates a residual value of $3,600 and a four-year service life. At the end of the second year, the company estimates that the equipment will be useful for four additional years, for a total service life of six years rather than the original four. At the same time, the company also changed the estimated residual value to $1,500 from the original estimate of $3,600. Required: Calculate how much The Donut Stop should record each year for depreciation in years 3 to 6.
On January 1, Year 1, the Dole Company purchased an asset that cost $154,000. The asset had an expected useful life of seven years and no estimated residual value. The company initially decided to use sum-of-the-years'-digits (SYD) depreciation for both financial accounting and income tax purposes. Depreciation expense for the straight-line method and the sum-of-the-years'-digits method is as follows: Year Straight-line over 7 Years SYD over 7 Years Difference 1 $22,000 $38,500 $16,500 2 22,000 33,000 11,000 3 22,000 27,500 5,500 4 22,000 22,000 0 5 22,000 16,500 (5,500) 6 22,000 11,000 (11,000) 7 22,000 5,500 (16,500) $154,000 $154,000 $0 At the beginning of Year 4, Dole changed from the sum-of-the-years'-digits method to the straight-line method of depreciation for financial reporting purposes. The company's income tax rate is 30%. In Year 3 and Year 4, Dole had $90,000 pretax income before depreciation and income taxes. Required: a. Complete the…
Use this information to answer the following 12 questions: Jefferson Company acquired equipment on January 2, Year 1, at a cost of $10 million. The equipment has a five-year life, no residual value, and is depreciated on a straight-line basis. On January 2, Year 3, Jefferson Company determines the fair value of the asset (net of any accumulated depreciation) to be $12 million. Determine the impact the equipment has on Jefferson Company's income in Year 1 using IFRS, assuming the revaluation method is used for measurement subsequent to initial recognition.
On January 1, 2007, Flax Co. purchased a machine for 528,000 and depreciated it by the straight-line method using an estimateduseful life of eight years with no salvage value. On January 1, 2010, Flax determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of 48,000. An accounting change was made in 2010 to reflect these additional data. The accumulated depreciation for this machine should have a balance at December 31, 2010 ofa.292,000b.308,000c.320,000d.352,000
On January 1, year 1 ABC. Ltd. had a piece of equipment with a cost of $ 150000 and accumulated depreciation of $ 60000. The company uses the straight line method. The equipment has a useful life of 10 years and a residual value of $ 30000. The equipment was sold on July 1, year 1 for $ 150000. Calculate the gain or loss on disposal. If the amount is a gain, enter the answer as a positive amount below (i.e. 20000). If the amount is a loss, enter the answer as negative amount below (i.e. -20000). Round your final answer to the nearest dollar.
On January 1, year 1 ABC. Ltd. had a piece of equipment with a cost of $ 150000 and accumulated depreciation of $ 60000. The company uses the straight line method. The equipment has a useful life of 10 years and a residual value of $ 30000. The equipment was sold on July 1, year 1 for $ 150000. Calculate the gain or loss on disposal. If the amount is a gain, enter the answer as a positive amount below (i.e. 20000). If the amount is a loss, enter the answer as negative amount below (i.e. -20000). Round your final answer to the nearest dollar.