The machinery's value in use has been assessed at $4,700,000 while the fair value less costs to sell is $4,000,000. With respect to the mine, the value in use is $8,200,000 while fair value less costs to sell is $8,430,000. (b) Determine if the machinery and the mine are impaired and prepare the journal entries, if any, to record the impairment at June 30, 2023. (Credit account titles are automatically intented 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. List all debit entries before credit entries) Date June 30, 2023 June 30, 2023 Account Titles and Explanation Recovery of Loss from Impairment Loss on Impairment (To record the impairment of machinery) Loss on Impairment Accumulated Impairment Losses-Mine (To record the impairment of mine) Debit 500000 220000 Credit 500000 100 220000
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- Ayayai Corp., a mining company, owns a significant mineral deposit in a northern territory. Ayayai prepares financial statements in accordance with IFRS. Included in the asset is a road system that was constructed to give company personnel access to the mineral deposit for maintenance and mining activity. The road system cannot be sold separately and separate cash flow information is not available for it. The carrying amounts of two cash-generating units of the mine at June 30, 2023, are as follows: Machinery Mine in the development phase The machinery's value in use has been assessed at $4,500,000 while the fair value less costs to sell is $3,800,000. With respect to the mine, the value in use is $8,000,000 while fair value less costs to sell is $8,200,000. $4,000,000 $8,350,000 (b) Determine if the machinery and the mine are impaired and prepare the journal entries, if any, to record the impairment at June 30, 2023. (Credit account titles are automatically indented when the amount is…Marigold Corp., a mining company, owns a significant mineral deposit in a northern territory. Marigold prepar accordance with IFRS. Included in the asset is a road system that was constructed to give company personnel access to the mineral deposit for maintenance and mining activity. The road system cannot be sold separately and separate cash flow information is not available for it. The carrying amounts of two cash-generating units of the mine at June 30, 2023, are as follows: Machinery Mine in the development phase The machinery's value in use has been assessed at $4,700,000 while the fair value less costs to sell is $4,000,000. With respect to the mine, the value in use is $8,200,000 while fair value less costs to sell is $8,430,000. *$4,200,000 $8,580,000 (b) Determine if the machinery and the mine are impaired and prepare the journal entries, if any, to record the impairment at June 30, 2023. (Credit account titles are automatically indented when the amount is entered. Do not…ok D ences General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant Cost Accumulated depreciation General's estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value The fair value of the Arizona plant is estimated to be $14 million. Required: 1. Determine the amount of impairment loss. 2. If a loss is indicated, prepare the entry to record the loss. 3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is (3) $15 million instead of $16.2 million and (4) $24.35 million instead of $16.2 million. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Impairment loss Req 3 and 4 Determine the amount of…
- 7. A company operates a mine in a country where legislation requires that the owner must restore the site on completion of its mining operations. The cost of restoration includes the replacement of the overburden, which must be removed before mining operations commence. A provision for the costs to replace the overburden was recognized as soon as the overburden was removed. The amount provided was recognized as part of the cost of the mine and is being depreciated over the mine's useful life. The carrying amount of the provision for restoration costs is P500,000, which is equal to the present value of the restoration costs.On July 1, 2021. A exchanged its non-monetary asset (equipment) with B's non-monetary asset (machinery). The following data were made available: A: Equipment P4,400,000 Accumulated depreciation P2,000,000 Cash received from B 500,000 B: Machinery P3,700,000 Accumulated depreciation 1,800,000 Cash paid to A 500,000 The transaction lacks commercial substance. How much is cost of the new asset of A?Presented below is net asset information related to the Metlock Division of Horton, Inc. Cash Receivable Property, plant, and equipment (net) Goodwill METLOCK DIVISION NET ASSETS AS OF DECEMBER 31, 2025 (IN MILLIONS) Less: Notes payable Net assets (a) $50 151 2,063 160 (2,141) $283 The purpose of the Metlock division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduced. Many other benefits would also occur. To date, management has not had much success and is deciding whether a write-down at this time is appropriate. Management estimated its future net cash flows from the project to be $322 million. Management has also received an offer to sell the division for $281 million. The book values and fair values are equal for all identifiable assets and liabilities. Prepare the journal entry (if any) to record the impairment at December 31, 2025. (Enter amounts in millions. If no entry is required, select "No Entry"…
- Nevada Gold Company (LLC) purchased a gold deposit for $1,500,000. It estimated it would extract 500,000 ounces of gold from the deposit. The company mined the gold and sold it, reporting gross receipts of $1.8 million, $2.5 million, and $2 million for Years 1 through 3, respectively. During Years 1 through 3, Nevada Gold reported net income (loss) from the gold deposit activity in the amount of ($100,000), $400,000, and $100,000, respectively. In Years 1 through 3, the company actually extracted 300,000 ounces of gold as follows: Ounces of Gold extracted per year Year 1 Year 2 Year 3 50,000 150,000 100,000 What is Nevada Gold's depletion deduction for Year 2 if the applicable percentage depletion for gold is 15 percent? Question 8 options: $450,000. $400,000. $375,000. $200,000.Zoomer inc. purchased a parcel of land with the intention of mining for phosphate. How should ghe land be recorded in zoomer ‘s financial statement while the company is determing the technical feasibility of mining the land? Assume that zoomer reports under ifrsFitzgerald Inc. uses IFRS and accounts for their property plant & equipment at amortized cost. Fitzgerald has a cash generating unit, Small Division, with a very unique business. Small Division has the following carrying amounts at June 30, 2021, its year end: $ 2,000 30,000 5,800 Land Building Equipment At June 30, 2021, the undiscounted future cash flows from operation and disposal of the division are estimated to be $38,000 (present value $33,50O). The land could now be sold for $3,000 (net of costs) but no separate valuations can be done on the building and equipment as there is little market for them for standalone use. Required: a. Perform impairment testing for the Small Division and calculate any impairment loss. b. Prepare the journal entry resulting from (a) c. Would your answer change if Fitzgerald reported under ASPE? How & Why?
- The management of Bonita Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $981,000 with depreciation to date of $436,000 as of December 31, 2025. On December 31, 2025, management projected its future net cash flows from this equipment to be $327,000 and its fair value to be $250,700. The company intends to use this equipment in the future. (a) Prepare the journal entry (if any) to record the impairment at December 31, 2025. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.) Date Dec. 31 Account Titles and Explanation eTextbook and Media List of Accounts Debit CreditOne of the machines of SKEWER PIERCE Co. has suffered physical damage but is still working, although not as well as before it was damaged. The machine does not generate independent cash inflows. The smallest identifiable group of assets that includes the machine and generates cash inflows that are largely independent of the cash inflows from other assets is the production line to which the machine belongs. Information on the machine and the production line is shown below: Carrying amount of machine ₱ 800,000 Fair value less costs of disposal of machine 600,000 Carrying amount of production line 32,000,000 Recoverable amount of production line 36,000,000 Thebudgets/forecasts approved by management reflect no commitment of management to replace the machine. How much is the impairment loss? Please provide solutions. a. 4,000,000 b. 200,000 c. 3,800,000 d. 0El Dorado Foods Incorporated owns a chain of specialty stores in the Pacific Northwest. Recently, four of the stores have experienced declining profits due to market saturation in the area. As a result, management gathered data about possible impairment of the assets of the stores. The information gathered was as follows: Book value: $17.5 million Fair value: $14.9 million Undiscounted sum of future cash flows: $16.5 million Required: Assume that the undiscounted sum of future cash flows is $18.2 million, instead of $16.5 million. Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets. Note: Enter your answer in millions (i.e., 5,000,000 should be entered as 5). Impairment loss 13 Show Transcribed Text Impairment loss C Required: Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets. Note: Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). $ C…