On 1 July 2015 a plant is acquired at a cost of $6 million. The asset is to be depreciated using the straight-line method on the basis of an estimated useful life of 15 years and a negligible residual value. On 30 June 2018 it is determined that the asset has a value in use of $4 million and a fair value of $3.6 million before costs of disposal of $50 000. The remaining useful life of the asset is reassessed to be 8 years. The appropriate impairment loss journal entry on 30 June 2018 would be: Oa. Dr Impairment Loss 800 000 CR Accum. deprec. & impairment losses 800 000 Ob. Dr Impairment Loss 1 200 000 CR Accum. deprec. & 1200 000 impairment losses Oc. Dr Impairment Loss 400 000 CR Accum, deprec. & 400 000 impairment losses O d. there is no impairment loss

On 1 July 2015 a plant is acquired at a cost of $6 million. The asset is to be depreciated using the straight-line method on the basis of an estimated useful life of 15 years and a negligible residual value. On 30 June 2018 it is determined that the asset has a value in use of $4 million and a fair value of $3.6 million before costs of disposal of $50 000. The remaining useful life of the asset is reassessed to be 8 years. The appropriate impairment loss journal entry on 30 June 2018 would be: Oa. Dr Impairment Loss 800 000 CR Accum. deprec. & impairment losses 800 000 Ob. Dr Impairment Loss 1 200 000 CR Accum. deprec. & 1200 000 impairment losses Oc. Dr Impairment Loss 400 000 CR Accum, deprec. & 400 000 impairment losses O d. there is no impairment loss

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

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 6RE

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On 1 July 2015 a plant is acquired at a cost of $6 million. The asset is to be
depreciated using the straight-line method on the basis of an estimated
useful life of 15 years and a negligible residual value.
On 30 June 2018 it is determined that the asset has a value in use of $4
million and a fair value of $3.6 million before costs of disposal of $50 000.
The remaining useful life of the asset is reassessed to be 8 years.
The appropriate impairment loss journal entry on 30 June 2018 would be:
O a.
Dr Impairment Loss
800 000
CR Accum. deprec. &
800 000
impairment losses
Ob.
Dr Impairment Loss
1 200 000
CR Accum. deprec. &
1200 000
impairment losses
Oc.
Dr Impairment Loss
400 000
CR Accum, deprec. &
impairment losses
400 000
Od. there is no impairment loss

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