Question 11A cash-generating unit comprises the following assets:£00070020090201,010BuildingPlant and equipmentGoodwillCurrent assetsFollowing an impairment review it was discovered that an item of plant carried at £40,000is damaged and will have to be scrapped. The recoverable amount of the cash-generatingunit is estimated at £750,000.Required:What will be the carrying amount of the building after the impairment loss has beenrecognised (to the nearest £000).

The objective of the question is to calculate the carrying amount of the building after recognising…

Answered: Question 11 A cash-generating unit…

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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EXERCISE/TUTORIAL12. 1 A 2 Rubicon Limited purchased machinery on 1 January 20.1 at a cost of R70 000. It has an expected useful life of ten (10) years with no residual value. REQUIRED 1. Calculate the Depreciation on machinery for 20.1 and 20.2 if: a. The straight-line method is used. b. The diminishing amount method is used (rate 20%). c. Sum-of-the-years-digit method is used. 2. Discuss the effect of a change in the method of depreciation from the straight- line method in 20.1 to the diminishing amount method in 20.2.
8.8 A new drill press was purchased for $95,000 by trading in a similar machine that had a book value of $25,000. Assuming that the trade-in allowance is $20,000 and that $75,000 cash is to be paid for the new asset, what is the cost basis of the new asset for book depreciation purposes?
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Problem 4 The following information pertains to Bosh Inc.'s depreciable assets: • Machine Y cost P525,000 and was acquired on January 1, 2016. On the acquisition date, the expected useful life was 12 years with no residual value. The straight line method was used. On January 1, 2020, it was estimated that the remaining life of the asset would be 4 years and that there would be a P25,000 residual value. • A building was purchased on January 1, 2017 for P3,000,000. The building was expected to have a useful life of 20 years with no residual value. The straight line depreciation method was used. On January 1, 2020, a change was made to the sum-of-the-years'-digits method of depreciation. No change was made to the estimated useful life and residual value of the building. _3. What is the depreciation expense of Machine Y for 2020? _4. What is the depreciation expense of building for 2022?
Question 5 The intangible asset of Goodwill: O A. Is amortized over a period of 20 years using the units-of-production method. O B. May be amortized using either the straight-line or units-of-production method. O C. Is amortized over a period of 20 years using the Straight-Line method. O D. Is not amortized, but is tested annually for impairment.
Problem 11-26 (Algo) (LO 11-9) Parnell Company acquired construction equipment on January 1, 2020, 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, 2021, 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: a. Prepare journal entries for this equipment for the years ending December 31, 2020, and December 31, 2021, under (1) U.S. GAAP and (2) IFRS.
Brief Exercise 8-5 (Algo) Effect of the disposal of plant assets on the financial statements LO 8-5 Mix & Match Company sold office equipment with a cost of $48,600 and accumulated depreciation of $33,000 for $28,000 cash. Required: a. What is the amount of gain or loss on the disposal? b. How would the sale affect net income (increase, decrease, no effect)? c. How would the sale affect the amount of total assets shown on the balance sheet (increase, decrease, no effect)? d. How would the event affect the statement of cash flows (inflow, outflow, no effect)? a. b. Effect of sale on net income c. Effect of sale on total assets d. Effect of sale on statement of cash flows
Problem 10-1A (Algo) Part 1-3 Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $31,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation. Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $800,000. The estimated market values of the purchased assets are building, $526,500; land, $263,250; land improvements, $39,000; and four vehicles, $146,250. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 2 Allocate the lump-sum purchase price to the separate assets purchased. Allocation of total cost Building Land Land improvements Vehicles Total Estimated Market Value $…
Problem 6-25 (Algo) Identify depreciation methods used LO 3 Grove Co. acquired a production machine on January 1, 2019, at a cost of $495,000. The machine is expected to have a four-year useful life, with a salvage value of $86,000. The machine is capable of producing 56,000 units of product in its lifetime. Actual production was as follows: 12,320 units in 2019; 17,920 units in 2020; 15,680 units in 2021; 10,080 units in 2022. Following is the comparative balance sheet presentation of the net book value of the production machine at December 31 for each year of the asset’s life, using three alternative depreciation methods (items a–c): Required: Identify the depreciation method used for each of the following comparative balance sheet presentations (items a–c). If a declining-balance method is used, be sure to indicate the percentage (150% or 200%). (Hint: Read the balance sheet from right to left to determine how much has been depreciated each year. Remember that December 31, 2019, is…
Exercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8] General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost Accumulated depreciation General's estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value The fair value of the Arizona plant is estimated to be $19.5 million. Required: 1. Determine the amount of impairment loss. 2. If a loss is indicated, prepare the entry to record the loss. 3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is (3) $19.5 million instead of $18.4 million and (4) $34.25 million instead of $18.4 million. Complete this question by entering your answers in the tabs below.…
A cash-generating unit comprises the following assets: £000 Goodwill Land Plant and equipment Select one: a. £2,285,716 b. £2,400,000 O c. £300,000 O d. e. 440 £2,021,052 £2,111,472 2,560 One of the pieces of equipment, carried at £160,000, is damaged and will have to be scrapped. The recoverable amount of the cash-generating unit is estimated at £3,000,000. What will be the carrying amount of the land after the impairment loss has been recognised? 800 3,800
Problem 1 A schedule of machinery owned by Trust Company is presented below: Machine A Machine B Machine C Total Cost 2,500,000.00 1,200,000.00 380,000.00 Estimated Salvage Estimated life in Value years 566,665.00 320,000.00 18.00 10.00 4.00 Trust Company computes depreciation on the straight line method. Required: Based upon the information presented, 1) what is the composite life of these assets? 2) what is the composite rate?

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