The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2020: Cost Accumulated depreciation to date $7,200,000 800,000 Expected future net cash flows (undiscounted) 5,600,000 Expected future net cash flows (discounted, value in use) 5,080,000 Fair value 4,960,000 Costs to sell (costs of disposal) 40,000 Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Sweet Acacia uses the straight-line method of depreciation. Your answer is correct. Assume that Sweet Acacia is a private company that follows ASPE. 1. Prepare the journal entry at December 31, 2020, to record asset impairment, if any. 2. Prepare the journal entry to record depreciation expense for 2021. 3. The equipment's fair value at December 31, 2021 is $5.20 million. Prepare the journal entry, if any, to record the increase in fair value. Your answer is partially correct. Repeat the requirements in (a) above assuming that Sweet Acacia 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 Account Titles and Explanation December 31, 2020 Loss on Impairment Accumulated Impairment Losses - Equipment December 31, 2021 Depreciation Expense December Accumulated Depreciation - Equipment Debit 1200000 300000 31, 2021 Accumulated Impairment Losses - Equipment 240000 Recovery of Loss from Impairment Credit 1200000 300000 240000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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answer must be in table format or i will give down vote 

 

The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2020:
Cost
Accumulated depreciation to date
$7,200,000
800,000
Expected future net cash flows (undiscounted)
5,600,000
Expected future net cash flows (discounted, value in use)
5,080,000
Fair value
4,960,000
Costs to sell (costs of disposal)
40,000
Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful
life of four years. Sweet Acacia uses the straight-line method of depreciation.
Your answer is correct.
Assume that Sweet Acacia is a private company that follows ASPE.
1.
Prepare the journal entry at December 31, 2020, to record asset impairment, if any.
2.
Prepare the journal entry to record depreciation expense for 2021.
3.
The equipment's fair value at December 31, 2021 is $5.20 million. Prepare the journal entry, if any, to record the increase
in fair value.
Transcribed Image Text:The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2020: Cost Accumulated depreciation to date $7,200,000 800,000 Expected future net cash flows (undiscounted) 5,600,000 Expected future net cash flows (discounted, value in use) 5,080,000 Fair value 4,960,000 Costs to sell (costs of disposal) 40,000 Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Sweet Acacia uses the straight-line method of depreciation. Your answer is correct. Assume that Sweet Acacia is a private company that follows ASPE. 1. Prepare the journal entry at December 31, 2020, to record asset impairment, if any. 2. Prepare the journal entry to record depreciation expense for 2021. 3. The equipment's fair value at December 31, 2021 is $5.20 million. Prepare the journal entry, if any, to record the increase in fair value.
Your answer is partially correct.
Repeat the requirements in (a) above assuming that Sweet Acacia 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
Account Titles and Explanation
December
31, 2020
Loss on Impairment
Accumulated Impairment Losses - Equipment
December
31, 2021
Depreciation Expense
December
Accumulated Depreciation - Equipment
Debit
1200000
300000
31, 2021
Accumulated Impairment Losses - Equipment
240000
Recovery of Loss from Impairment
Credit
1200000
300000
240000
Transcribed Image Text:Your answer is partially correct. Repeat the requirements in (a) above assuming that Sweet Acacia 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 Account Titles and Explanation December 31, 2020 Loss on Impairment Accumulated Impairment Losses - Equipment December 31, 2021 Depreciation Expense December Accumulated Depreciation - Equipment Debit 1200000 300000 31, 2021 Accumulated Impairment Losses - Equipment 240000 Recovery of Loss from Impairment Credit 1200000 300000 240000
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