Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 12, Problem 12.11BE
Impairment Reversal. IFRS. Perlu Products an IFRS reporter reported an impairment loss of $65,000 for one of its plant assets on December 31 2018 At December 31, 2019, the asset s recoverable amount increased by $90,000 The current carrying value is $100,000 less than it would have been if the asset had not been impaired The recoverable amount does not exceed the original carrying value net of
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Impairment and Revaluation of PPE
On January 1, 2016, Jude Co. acquired machinery with a cost of P2,300,000 with an estimated useful life of 10 years and an estimated salvage value of P200,000. On January 1, 2017, based on the objective, the machinery was found to have been impaired. The machinery has a recoverable amount (fair value) of P1,850,000 with an estimated useful residual value of P50,000.
On January 1, 2019, the machinery now has a recoverable amount (fair value) of P1,499,400 with no residual value.
Assuming the company is using a revaluation model, answer the following:
How much is the depreciation expense in 2016?
How much is the impairment loss in 2017?
How much is the depreciation expense in 2017?
How much is the revaluation surplus on January 1, 2019?
How much is the depreciation expense in 2019?
Identifying and Recording Impairment Loss on Plant Asset
Three cases are provided below concerning a plant asset currently used in operations.
Case Carrying Value Recoverable Cost Fair Value
A
$18,000
B
16,000
с
12,000
$16,000
18,000
24,000
$24,000
26,000
16,000
Required
a. Which case(s), if any, requires an impairment loss to be recognized, and for what amount? Assume that indicators of impairment are present in all cases.
Case A $
Case B $
Case C $
Note: If the asset is not impaired, enter a zero (or leave blank) for the loss.
Note: Do not use negative signs with your answers.
Impairment Loss
b. Record the entry for the impairment loss on the case(s) identified in part a (if any).
Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).
Account Name
♦
♦
Dr.
Cr.
Assignment
On 1 January 2016 ABC Ltd purchased a machine worth GH¢480,000 with an estimated useful life of 20 years and an estimated zero residual value. Depreciation is on a straight-line basis. The asset had been re-valued on 1 January 2018 to GH¢500,000, but with no change in useful life at that date. On 1 January 2019 an impairment review showed the machine’s recoverable amount to be GH¢200,000 and its remaining useful life to be 10 years.
Required: Calculate
a) the carrying amount of the machine on 31 December 2017
b) the revaluation surplus arising on 1 January 2018
c) the carrying amount of the machine on 31 December 2018 (immediately before the impairment).
d) the impairment loss recognised in the year to 31 December 2019.
e) The depreciation charge in the year to 31 December 2019.
Chapter 12 Solutions
Intermediate Accounting
Ch. 12 - Prob. 12.1QCh. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.1MCCh. 12 - Prob. 12.2MCCh. 12 - Prob. 12.3MCCh. 12 - Prob. 12.4MCCh. 12 - Prob. 12.5MCCh. 12 - Prob. 12.6MCCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Indefinite-Life Intangible Asset Impairment....Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Impairment Reversal. IFRS. Perlu Products an IFRS...Ch. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.21BECh. 12 - Prob. 12.22BECh. 12 - Prob. 12.23BECh. 12 - Tangible Asset Impairment. Henne Optical...Ch. 12 - Tangible Asset Impairment Loss. Use the same...Ch. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Tangible Asset Impairment Loss, IFRS. Use the same...Ch. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Assets Held for Disposal. Hattie Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Asset Revaluation, Downwards, IFRS. Lousa Company...Ch. 12 - Tangible Asset Impairment. Chrispian Cookies, Inc....Ch. 12 - Prob. 12.2PCh. 12 - Tangible Asset Impairment. Using the same...Ch. 12 - Prob. 12.4PCh. 12 - Goodwill Impairment, Tangible Fixed Assets, and...Ch. 12 - Tangible Asset Impairment, Potential Reversal,...Ch. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Comprehensive Asset Revaluation Problem (Initial...Ch. 12 - Prob. 12.11PCh. 12 - Judgment Case 1: Impairments of PPE under IFRS...Ch. 12 - Prob. 2JCCh. 12 - Prob. 3JCCh. 12 - Surfing the Standards Case 1: Impairments of PPE...Ch. 12 - Prob. 2SSCCh. 12 - Financial Statement Analysis Case 1: Long-Lived...Ch. 12 - Prob. 1BCCCh. 12 - Basis for Conclusions Case 2: Intangible Assets ...Ch. 12 - Basis for Conclusions Case 3: Goodwill Impairment...
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