On January 1, 2021, an impairment test was conducted by Radyowap Co. on itsRadio Equipment which has an original cost of P1,000,000.00 and an accumulateddepreciation in the amount of P300,000.00. Following this, it discovered that saidEquipment had a fair value less cost to sell in the amount of P150,000.00 and a valuein use in the amount of P300,000.00. Determine the Impairment Loss to berecognized on January 1, 2021.

Impairment loss = Carrying amount - Recoverable amount Recoverable amount is the higher of value in…

Answered: On January 1, 2021, an impairment test…

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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On January 1, 2001, MM Inc. constructed a building classified as owner occupied property at a cost of P3,000,000 with no residual value and useful life of 10 years. On December 31, 2002, there is objective evidence of impairment of the building and its value in use is measured at P1,600,000 while its fair value less cost to sell is at P1,500,000. On December 31, 2004, the value in use of the building is at P2,300,000 while its fair value less cost to sell is P1,700,000. Required: Based on the result of your audit, determine the following:__________1. Impairment loss for the year ended December 31, 2002__________2. Carrying amount of building on December 31, 2002__________3. Depreciation expense for the year ended December 31, 2003__________4. Carrying amount of building on December 31, 2004__________5. Gain on reversal of impairment loss for the year ended December 31, 2004__________6. Depreciation expense for the year ended December 31, 2005
In December 2005, SHOWEE Company exchanged an old machine, with a cost P6,000,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P1,500,000. The fair value of the old machine was determined to be P2,000,000. SHOWEE should record the machine at 6,000,000 3,500,000 3,000,000 2,000,000
Shamrock Inc. owns equipment that cost $605,000 and has accumulated depreciation of $157,000. The expected future net cash flows from the use of the asset are expected to be $400,000. The fair value of the equipment is $346,000. Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
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Tracy Ltd. purchased a piece of equipment on January 1, 2016, for $1,260,000. At that time, it was estimated that the machine would have a 15-year life and no residual value. On December 31, 2020, Tracy’s controller found that the entry for depreciation expense was omitted in error in 2017. In addition, Tracy planned to switch to double-declining-balance depreciation because of a change in the pattern of benefits received, starting with the year 2020. Tracy currently uses the straight-line method for depreciating equipment. Prepare the general journal entries, if any, the accountant should make at December 31, 2020. (Ignore tax effects.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round the rate of deprecition under double decling balance method to 5 decimal places, ie. 13.33333%. Round answers to 0 decimal places, e.g. 5,125.)…
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Crane Corporation uses straight-line depreciation, prepares adjusting entries annually, and has a December 31 year end. It purchased equipment on January 1, 2020, for $196,400. The equipment had an estimated useful life of five years and a residual value of $20,440. On December 31, 2021, the company tests for impairment and determines that the equipment's fair value is $95,600. (a) (b) Your answer has been saved. See score details after the due date. Assuming annual depreciation has already been recorded at December 31, calculate the equipment's carrying amount at December 31, 2021, immediately after recording depreciation for the year. Carrying amount Calculate the amount of the impairment loss, if any. Impairment loss $ 126016 Save for Later Attempts: 1 of 1 used Attempts: 0 of 1 used Submit Answer

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