Stag, a public limited company, is preparing its financial statements for the year ending 31 December 2021. The exhibits contain information relevant to the question Exhibit 1– Accounting for Impairment Stag plc, which has a 31 December year end, acquired an item of property, plant, and equipment (PPE) on 1 January 2019 for £50,000 for which it applies the revaluation model. The asset is depreciated on a straight-line basis over its useful economic life of ten years (the assumed residual value is nil). On 1 January 2020, it was established that the gross replacement cost of the asset (i.e. the gross revalued amount of the asset before any depreciation is deducted) was £60,000. On 31 December 2021, there are indications that the asset is impaired, an impairment test is carried out, and the recoverable amount at that date is estimated as £30,000. question： Using Exhibit 1, explain the impact of the transactions on the financial statements 2020 and 2021. (Hint: you can show the double entry bookkeeping or describe the impact on financial statements with your own words).
Stag, a public limited company, is preparing its financial statements for the year ending 31 December 2021. The exhibits contain information relevant to the question
Exhibit 1– Accounting for Impairment
Stag plc, which has a 31 December year end, acquired an item of property, plant, and equipment (PPE) on 1 January 2019 for £50,000 for which it applies the revaluation model. The asset is depreciated on a straight-line basis over its useful economic life of ten years (the assumed residual value is nil). On 1 January 2020, it was established that the gross replacement cost of the asset (i.e. the gross revalued amount of the asset before any depreciation is deducted) was £60,000. On 31 December 2021, there are indications that the asset is impaired, an impairment test is carried out, and the recoverable amount at that date is estimated as £30,000.
question：
- Using Exhibit 1, explain the impact of the transactions on the financial statements 2020 and 2021. (Hint: you can show the double entry bookkeeping or describe the impact on financial statements with your own words).
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