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 iscomputed 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.

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Description: 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 iscomputed on the basis of the nearest full month. The followi

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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$450,000 HK$360,000 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.

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$450,000 HK$360,000 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.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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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.

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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.

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