1. The company purchased the equipment on October 1, 20X1 for $100,000, and estimated that the equipment will use for 5 years and has a residual value of $2,000. The equipment has the following capacity: 10,000 service hours. December 31 is the reporting date. The equipment provided 600 and 2,200 service hours in 20X1 and 20X2, respectively. Required Calculate depreciation expense for 20X1 and 20X2 using different methods in the following table Straight-line Double-declining-balance Activity method For 20X1, 20X2 2. The company provided the data of PP&E in a cash-generating unit (CGU) as follows: Cost Acmulated Depreciation Equipmnt A $15,000 $8,000 Equipment B $30,000 $19,000 Equipment C $45,000 $23,000 The unit’s fair value less costs to sell was $25,000. The unit’s future cash flows was $32,000, and its present value was $28,000. The company adopted IFRS. Required (1) Prepare journal entries to record impairment. (2) If the recoverable amount of Equipment C is $19,000, prepare journal entries to record impairment. (3) If the recoverable amount of Equipment C is $24,000, prepare journal entries to record impairment.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
1. The company purchased the equipment on October 1, 20X1 for $100,000, and estimated that the equipment will use for 5 years and has a residual value of $2,000. The equipment has the following capacity: 10,000 service hours. December 31 is the reporting date. The equipment provided 600 and 2,200 service hours in 20X1 and 20X2, respectively.
Required
Calculate
Straight-line
Double-declining-balance
Activity method
For 20X1, 20X2
2. The company provided the data of PP&E in a cash-generating unit (CGU) as follows:
Cost Acmulated Depreciation
Equipmnt A $15,000 $8,000
Equipment B $30,000 $19,000
Equipment C $45,000 $23,000
The unit’s fair value less costs to sell was $25,000. The unit’s future cash flows was $32,000, and its present value was $28,000. The company adopted IFRS.
Required
(1) Prepare
(2) If the recoverable amount of Equipment C is $19,000, prepare journal entries to record impairment.
(3) If the recoverable amount of Equipment C is $24,000, prepare journal entries to record impairment.
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Hi, can you answer the following questions that wasn't answered in the problem and count it as 2 questions submitted? As some part of the question wasn't answered please
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