Chapter 12, Problem 12.6P

Tangible Asset Impairment, Potential Reversal, IFRS. Use the same information from P12-1 with three modifications.

• Chrispian Cookies Inc is an IFRS reporter.
• Similar baking equipment could be sold for $5,100,000.
• Chrispian estimates that costs to sell the baking equipment are $5,000.

Required

1. a. Conduct an impairment test for Chnspian s baking equipment.
2. b. Prepare the journal entry to record any impairment loss indicated.
3. c. Compute the amount of the revised depreciation expense at the end of the next year. Assume that management now estimates that there will be no residual value at the end of the asset's life.
4. d. Prepare any journal entry necessary if the estimated fair value less costs to sell at the end of the next year is $5,400,000 and its value in use is $4,900,000.