Show your computationIn early 2020, Cattle Inc. acquired production machinery at a cost of £400,000 withno residual value. The company applies straight-line method.At the end of 2023, when accumulated depreciation was £160,000, Cattle reportedan impairment loss of £80,000,One year later, the fair value less selling costs of the machinery is £210,000 and itsvalue in use is £208,000.InstructionsPrepare journal entry related to loss on impairment in 2023 and recovery ofimpairment loss in 2024 if the company applies revaluation model (proportionalmethod).

Name: Show your computationIn early 2020, Cattle Inc. acquired production m
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Description: Show your computationIn early 2020, Cattle Inc. acquired production machinery at a cost of £400,000 withno residual value. The company applies straight-line method.At the end of 2023, when accumulated depreciation was £160,000, Cattle reportedan imp

Net book value at the end of 2023 = cost - accumulated depreciation - impairment loss =…

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Accounting

In early 2020, Cattle Inc. acquired production machinery at a cost of £400,000 with no residual value. The company applies straight-line method. At the end of 2023, when accumulated depreciation was £160,000, Cattle reported an impairment loss of £80,000O. One year later, the fair value less selling costs of the machinery is £210,000 and its value in use is £208,000. Instructions Prepare journal entry related to loss on impairment in 2023 and recovery of impairment loss in 2024 if the company applies revaluation model (proportional method).

In early 2020, Cattle Inc. acquired production machinery at a cost of £400,000 with no residual value. The company applies straight-line method. At the end of 2023, when accumulated depreciation was £160,000, Cattle reported an impairment loss of £80,000O. One year later, the fair value less selling costs of the machinery is £210,000 and its value in use is £208,000. Instructions Prepare journal entry related to loss on impairment in 2023 and recovery of impairment loss in 2024 if the company applies revaluation model (proportional method).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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

Show your computation
In early 2020, Cattle Inc. acquired production machinery at a cost of £400,000 with
no residual value. The company applies straight-line method.
At the end of 2023, when accumulated depreciation was £160,000, Cattle reported
an impairment loss of £80,000,
One year later, the fair value less selling costs of the machinery is £210,000 and its
value in use is £208,000.
Instructions
Prepare journal entry related to loss on impairment in 2023 and recovery of
impairment loss in 2024 if the company applies revaluation model (proportional
method).

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