On January 2, 2018, Rahaf purchased equipment with a cost of HK$2,088,000, a useful life of 10years and no salvage value. The company uses straight-line depreciation. At December 31,2018 and December 31, 2019, the company determines that impairment indicators are present.The following information is available for impairment testing at each year end:12/31/201812/31/2019Fair value less costs to sellHK$1,863,000Hk$1,770,000Value-in-useHK$1,870,000HK$1,783,000There is no change in the asset's useful life or salvage value. The 2018 income statement willreport Impairment Loss of HK$

Impairment is the loss in the value of asset . It is pertinent to note that impairment loss is…

Answered: Impairment Loss of HRS

Business

Accounting

Impairment Loss of HRS

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

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...

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Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
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.
Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?
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, 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, 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: 12/31/2020 12/31/2021 Fair value less cost to sell P8,515,000 P7,530,000 Value-in-use P8,551,000 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?
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?
Asset ImpairmentGreen Light Ltd (GLL) tested a machine for impairment on 31 December 2018. The machine was carried at depreciated historical cost, and its carrying amount was $150,000. It had an estimated remaining useful life of 10 years. GLL's accounting policy required all property, plant and equipment's recoverable amount was determined on the basis of value-in-use calculation, using a discount rate of 15%. The management of GLL estimated the future net cash flows of the machine using reasonable assumptions. The following information related to future net cash flows of the machine was available at the end of 2018. Year Future net cash flow ('000)2019 22,1652020 21,4502021 20,5502022 24,7252023 25,3252024 24,8252025 24,1232026 25,5332027 24,2342028 22,850 Suppose in the years 2019-2021, no event occurred that required the machine's recoverable amount to be re-estimated. On 31 December 2022, costs of $25,000 were incurred to enhance the machine's performance. Revised estimated…
On January 1, 2022, Roxanne 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, 2022 and December 31, 2023, the entity determined that impairment indicators are present. There is no change in useful life or residual value. The following information is available for impairment testing at each year-end: December 31, 2022 December 31, 2023 8,400,000 8,200,000 Fair value less cost of disposal 8,100,000 Value in use 8,550,000 1. What is the impairment loss for 2022? A. 900,000 C. 600,000 B. 450,000 D. Zero 2. What is the gain on reversal of impairment for 2023? A. 400,000 B. 800,000 C. 600,000 D. Zero 3. What is the depreciation for 2024? C. 1,025,000 D. 950,000 A. 1,000,000 B. 1,050,000
On March 9, 2019, Alpha Inc. purchased an equipment with a cost of HK$600,000, a useful life of five years and no salvage value. The Company uses the straight - line method. Depreciation is computed on the basis of the nearest full month. The following information is available at each year end: 12/31/2019 12/3 1/2020 Fair value less cost to sell HK$450, OOO HK$360, OOO Value,,in - use HK$440,000 HK$392,000 There is no change in the asset's useful life or salvage value Required: (a) Prepare journal entries to record depreciation expense and impairment test for 2019. (b) Prepare journal entries to record depreciation expense and impairment test for 2020.
Muscat LLC purchased a machine on 1st January,2019 for OMR 125,000. The rate of depreciation is 20% p.a. under straight line method. Replacement Cost of the machine on 31st December,2019 was OMR 175,000 and on 31st December, 2020 was OMR 250,000. The company wishes to follow Current Cost Accounting rather than the Historical Cost Accounting. a. What is the amount of Depreciation Adjustment? b. What is the amount of Additional Depreciation? c. What is the amount of Back Log Depreciation?