Muskoko Inc. purchased a property for $1.800,000 in 2022. The carrying value of property was $1,500,000 when it was required to be tested for impairment atDecember 31, 2026. The fair value at December 31, 2026 is $1,250,000 and the present value of future cash flows from the production facility was calculated asS1.056.000 at December 31, 2026. What is the total impairment of the production facility. if any?Answers A-EA impairment gain of $ 5S0.000B Impairment loss of $ 250.000No impairment gain or lossD Impairmenit gain of $300.000E mpairment loss of $ 444,000

Correct option: B. Impairment loss of $ 250,000 Incorrect options: A. Impairment gain of $ 550,000…

Muskoko Inc. purchased a property for $1.800,000 in 2022. The carrying value of property was $1,500,000 when it was required to be tested for impairment at December 31, 2026. The fair value at December 31, 2026 is $1,250,000 and the present value of future cash fows from the production facility was calculated as $1,056.000 at December 31, 2026, What is the total impairment of the production facilty, if any? Answers A -E A imparment gan of 8 5s000 B impairment loss of $ 250.000 C No impaiment pain or loss D Impairment gainof $ 300.000 E mparment loss of S 444,000

Muskoko Inc. purchased a property for $1.800,000 in 2022. The carrying value of property was $1,500,000 when it was required to be tested for impairment at December 31, 2026. The fair value at December 31, 2026 is $1,250,000 and the present value of future cash fows from the production facility was calculated as $1,056.000 at December 31, 2026, What is the total impairment of the production facilty, if any? Answers A -E A imparment gan of 8 5s000 B impairment loss of $ 250.000 C No impaiment pain or loss D Impairment gainof $ 300.000 E mparment loss of S 444,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2020, ABC corporation received P8,000,000 from the City of Caloocan to construct an overpass in the intersection of Camarin. The cost of the overpass is P25,000,000, with a useful life of 20 years. How much is the carrying value of the overpass as of December 31, 2021 assuming ABC used the deduction to asset approach?
On January 2, 2018, Rahaf purchased equipment with a cost of HK$2,088,000, a useful life of 10 years 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: 12/31/2018 12/31/2019 Fair value less costs to sell HK$1,863,000 Hk$1,770,000 Value-in-use HK$1,870,000 HK$1,783,000 There is no change in the asset's useful life or salvage value. The 2018 income statement will report Impairment Loss of HK$
Parnell Company acquired construction equipment on January 1, 2023, at a cost of $77,000. The equipment was expected to have a useful life of five years and a residual value of $14,000 and is being depreciated on a straight-line basis. On January 1, 2024, the equipment was appraised and determined to have a fair value of $73,600, a salvage value of $14,000, and a remaining useful life of four years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16. Assume that Parnell Company is a U.S.-based company that is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes. Required: Prepare journal entries for this equipment for the years ending December 31, 2023, and December 31, 2024, under (1) U.S. GAAP and (2) IFRS. Prepare the entry(ies) that Parnell would make on…
Nash Mining Company purchased land on February 1, 2020, at a cost of $ 914,300. It estimated that a total of 53,400 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $ 98,100. It believes it will be able to sell the property afterwards for $ 109,000. It incurred developmental costs of $ 218,000 before it was able to do any mining. In 2020, resources removed totaled 26,700 tons. The company sold 19,580 tons.Compute the following information for 2020. (a) Per unit mineral cost $ (b) Total material cost of December 31, 2020, inventory $ (c) Total material cost in cost of goods sold at December 31, 2020 $
Michael Company acquired a depreciable asset at the beginning of 2020 at a cost of $30 million. On December 31, 2020, Madison gathered the following information related to this asset Fair value of the asset (Net Selling Price) $26.5 million Sum of future cash flows from the use of the asset $25 million Present value of future cash flows $26 million The remaining useful life of the asset 9 years Required: Under IFRS: 1) The determination and measurement of impairment loss? 2) Following journal entry would be made to reflect the impairment of this equipment on December 31, 2020?
On 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 January 1, 2019, Yolanda Company purchased a plating machine for P5,400,000. Yolanda received a government grant of P400,000 toward this capital cost. The machine is to be depreciated using straight line method with a five year life and no salvage value. The accounting policy is to treat the government grant as a reduction in the cost of the asset. What is the carrying amount of the machine on December 31, 2020?
On December 31, 2019, an equipment with a carrying amount of P6,500,000 (cost of P10.000,000 less accumulated depreciation of P3,500,000) was tested for impairment. An impairment loss of P1,250,000 was recognized and the basis is the recoverable amount which is the estimated fair value less costs to sell on this date. The equipment had a remaining useful life of 8 years and estimated residual value of P50,000. On December 31, 2022, there are indications that the impairment loss recognized in 2019 may be reversed. The value in use is based on estimated net cash flows of P1,000,000 every year (discount rate is 7%) while the asset is in use while the fair value was at P4,200,000 and costs to sell is estimated at P90,000. Which of the following statements is (are) correct? Statement 1: The asset is reported in the statement of financial position as of December 31, 2022 at P4,110,000. Statement 2: The income statement for the year ended December 31, 2022 shall report a 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: 12/31/2020 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?
Calaf’s Drillers erects and places into service an off-shore oil platform on January 1, 2018, at a cost of $10,000,000. Calaf is legally required to dismantle and remove the platform at the end of its useful life in 10 years. Calaf estimates it will cost $1,000,000 to dismantle and remove the platform at the end of its useful life in 10 years. (The fair value at January 1, 2018, of the dismantle and removal costs is $450,000.) Prepare the entry to record the asset retirement obligation.
On January 1, 2023, a company acquired an established coal mine. The company anticipates operating the mine for four years, and subsequently, it is obligated by law to dismantle the mine. The estimated dismantling cost is $500,000. The company utilizes straight-line depreciation and an accretion rate of 10%. The relevant present value factor is 0.68301. What is the amount of accretion expense that the company will report for the year ending December 31, 2024 (i.e., end of year 2)?
On January 1, 2020, ABC Corp acquired a piece of machinery for $500,000. The machinery has an estimated useful life of 10 years and a residual value of $50,000. ABC Corp decided to use the double-declining balance method for depreciation. Additionally, the company incurred $15,000 in transportation costs and $5,000 in installation costs to get the machinery ready for use. Furthermore, on December 31, 2021, the company conducted an impairment test and determined that the machinery's recoverable amount is $450,000, and its fair value is $420,000. The company expects to use the machinery for the remaining estimated useful life. Prepare the necessary journal entries for ABC Corp related to the machinery for the year 2020 and 2021, including depreciation, impairment, and any adjusting entries needed at the end of each year