The information that follows relates to equipment owned by Waterway Limited at December 31, 2020: Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell (costs of disposal) $7,020,000 780,000 5,460,000 4,953,000 4,836,000 39,000
The information that follows relates to equipment owned by Waterway Limited at December 31, 2020: Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell (costs of disposal) $7,020,000 780,000 5,460,000 4,953,000 4,836,000 39,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Do not give image format
Transcribed Image Text:The information that follows relates to equipment owned by Waterway Limited at December 31, 2020:
Cost
Accumulated depreciation to date
Expected future net cash flows (undiscounted)
Expected future net cash flows (discounted, value in use)
Fair value
Costs to sell (costs of disposal)
$7,020,000
780,000
5,460,000
4,953,000
4,836,000
39,000
Assume that Waterway will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful
life of four years. Waterway uses the straight-line method of depreciation.
Transcribed Image Text:Assume that Waterway is a private company that follows ASPE.
1.
2.
3.
(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.)
No.
(1)
(2)
(3)
Prepare the journal entry at December 31, 2020, to record asset impairment, if any.
Prepare the journal entry to record depreciation expense for 2021.
The equipment's fair value at December 31, 2021 is $5.07 million. Prepare the journal entry, if any, to record the
increase in fair value.
No.
(1)
(2)
Date Account Titles and Explanation
December
31, 2020
Show Transcribed Text
(3)
December
31, 2021
December
31, 2021
Repeat the requirements in (a) above assuming that Waterway is a public company that follows IFRS. (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.)
Date
December
31, 2020
December
31, 2021
December
31, 2021
C
Account Titles and Explanation
Debit
Credit
Debit
Credit
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