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The information that follows relates to equipment owned by Bonita Limited at December 31, 2023: Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value $7,830,000 870,000 6,090,000 5,524,500 5,394,000

The information that follows relates to equipment owned by Bonita Limited at December 31, 2023: Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value $7,830,000 870,000 6,090,000 5,524,500 5,394,000

FINANCIAL ACCOUNTING
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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1. 2. The information that follows relates to equipment owned by Bonita Limited at December 31, 2023: 3. Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) (2) Fair value Costs to sell (costs of disposal) (3) (b1-b3) (a1-a3) Assume that Bonita is a private company that follows ASPE. (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 O for the amounts. List all debit entries before credit entries.) No. Account Titles and Explanation (1) At December 31, 2023, Bonita discontinues use of the equipment and intends to dispose of it in the coming year by selling it to a competitor. It is expected that the costs of disposal will total $43,500. Your answer is correct. Prepare the journal entry at December 31, 2023, to record asset impairment, if any. Prepare the journal entry to record depreciation expense for 2024. Assume that the asset was not sold by December 31, 2024. The equipment's fair value (and recoverable mount) on this date is $5.66 million. Prepare the journal entry, if any, to record the increase in fair value. It is expected that the costs of disposal will total $43,500. (1) (2) Loss on Impairment Assume that Bonita is a private company that follows ASPE. (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 O for the amounts. List all debit entries before credit entries) No Entry Accumulated Impairment Losses - Equipment (3) 4 No Entry $7,830,000 870,000 Accumulated Impairment Losses- Equipment No. Account Titles and Explanation 6,090,000 Recovery of Loss from Impairment 5,524,500 5,394,000 43,500 Debit 1609500 266000 Repeat the requirements in (a) above assuming that Bonita is a public company that follows IFRS, and that the asset meets all criteria for classification as an asset held for sale. (Credit account titles are automatically indented when the amount is entered. Do n Indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) 4 Credit Debit 1609500 0 266000 Credit
Transcribed Image Text:1. 2. The information that follows relates to equipment owned by Bonita Limited at December 31, 2023: 3. Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) (2) Fair value Costs to sell (costs of disposal) (3) (b1-b3) (a1-a3) Assume that Bonita is a private company that follows ASPE. (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 O for the amounts. List all debit entries before credit entries.) No. Account Titles and Explanation (1) At December 31, 2023, Bonita discontinues use of the equipment and intends to dispose of it in the coming year by selling it to a competitor. It is expected that the costs of disposal will total $43,500. Your answer is correct. Prepare the journal entry at December 31, 2023, to record asset impairment, if any. Prepare the journal entry to record depreciation expense for 2024. Assume that the asset was not sold by December 31, 2024. The equipment's fair value (and recoverable mount) on this date is $5.66 million. Prepare the journal entry, if any, to record the increase in fair value. It is expected that the costs of disposal will total $43,500. (1) (2) Loss on Impairment Assume that Bonita is a private company that follows ASPE. (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 O for the amounts. List all debit entries before credit entries) No Entry Accumulated Impairment Losses - Equipment (3) 4 No Entry $7,830,000 870,000 Accumulated Impairment Losses- Equipment No. Account Titles and Explanation 6,090,000 Recovery of Loss from Impairment 5,524,500 5,394,000 43,500 Debit 1609500 266000 Repeat the requirements in (a) above assuming that Bonita is a public company that follows IFRS, and that the asset meets all criteria for classification as an asset held for sale. (Credit account titles are automatically indented when the amount is entered. Do n Indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) 4 Credit Debit 1609500 0 266000 Credit
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