Question
In: Accounting
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000 420 000 490 000 Indicators of impairment were identified on 30 June 2019, while indicators of a reversal of impairment were found on 30 June 2020.
REQUIRED: Prepare journal entries relating to this asset from 30 June 2019 to 30 June 2020. Show the steps of impairment (or reversal of impairment) tests. Show all working (step by step).
Solutions
ekkarill92 answered 1 year agoRelated Solutions
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The
machine had a useful life of five years and was depreciated on a
straight-line basis with no disposal value. ABC Ltd adopts the cost
model for accounting for assets in this class. ABC Ltd makes the
following estimates of the value of the machine:
Date
Net selling price
Value in use
Fair Value
30 June 2019
$550 000
520 000
590 000
30 June 2020
$460 000...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The
machine had a useful life of five years and was depreciated on a
straight-line basis with no disposal value. ABC Ltd adopts the cost
model for accounting for assets in this class. ABC Ltd makes the
following estimates of the value of the machine: Date Net selling
price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000
30 June 2020 $460 000...
Gunna Ltd acquired a printing machine on 1 July 2018 for $100,000. It is expected to...
Gunna Ltd acquired a printing machine on 1 July 2018 for
$100,000. It is expected to have a useful life of 5 years, with the
benefits being derived on a straight- line basis. The residual is
expected to be $nil. On 1 July 2019 the machine is deemed to have a
fair value of $75,000 and a revaluation is undertaken in accordance
with Gunnamatta Ltd’s policy of measuring property, plant and
equipment at fair value. The asset is sold for...
On 1 July 2018 Alto Ltd purchased land for $4 000 000, in cash. Alto Ltd...
On 1 July 2018 Alto Ltd purchased land for $4 000 000, in cash.
Alto Ltd uses the cost model to account for land.
On 1 July 2018 Alto Ltd purchased equipment for $1 000 000, in
cash. Alto Ltd uses the revaluation model to account for equipment
and depreciates the asset over its estimated useful life of 5 years
using the straight-line method. The disposal value at the end of 5
years was assessed as zero.
The following information...
On 1 July 2017, Koala Ltd acquired a depreciable asset at a cost of $500 000....
On 1 July 2017, Koala Ltd acquired a depreciable asset at a cost
of $500 000. The asset is to be depreciated for accounting purposes
over a useful life of four years using the straight-line method and
a zero residual value. For tax purposes, depreciation is deductible
at the rate of 40% per annum on the reducing balance. For the year
ended 30 June 2018, taxable income of Koala Ltd was $250 000.
On 1 July 2018, Koala Ltd revalued...
On July 1, 2010, ABC co. had a cash balance of $10 000.During July the following...
On July 1, 2010, ABC co. had a
cash balance of $10 000.During July the following summary
transactions were completed.
1.Received $1,200 cash from customers on
account.
2.Received $2,400 cash for services performed in
July.
3.Purchased store equipment on account
$3,000.
4.Paid cash $ 2000 for a one – year insurance
policy.
5.Purchased supplies on account $1,200.
6.Paid creditors $4,400 on account.
7.Performed services on account and billed customers for
services provided $1,500.
8.Signed a contract with Alex company to...
On 1 July 2018 Mi Ltd issues $32 000 000 in five-year debentures that pay interest...
On 1 July 2018 Mi Ltd issues $32 000 000 in five-year debentures
that pay interest each six months at a coupon rate of 8 per cent.
At the time of issuing the securities, the market requires a rate
of return of 6 per cent. Interest expense is determined using the
effective-interest method.
Note: PV and Annuity tables are provided on the last page of
this document
REQUIRED
Determine the issue price.
Show the calculations in the table opening/closing values...
MTM Ltd acquired a machine with an original cost of R900 000 on 1 January 2017....
MTM Ltd acquired a machine with an
original cost of R900 000 on 1 January 2017. The machine has a
five-year life and an estimated salvage value of 100 000.
a) Compute depreciation for 2017 and
2018 under each of the following methods:
i. Sum-of-years’ digits
ii. Double declining balance
iii. Straight line
b) Compare the impact of the straight
line and double-declining balance method on each of the
following:
i. Trend of depreciation over a five
year life
ii....
1] On 1 January 2018 Panorama Ltd acquired equipment for $22 000, net of GST. The...
1] On 1 January 2018 Panorama Ltd acquired equipment for $22
000, net of GST. The estimated residual value for the equipment is
zero. Depreciation is calculated at 10% p.a) on the
diminishing-balance basis. The depreciation expense for the year
ended 31 December 2020 is:
a
$1604.
b
$1782.
c
$1980.
d
$2200.
2] The correct entry to record the purchase of a motor vehicle
for $40 000 cash, plus 10% GST is which of the following?
a
DR Motor...
Salidou Ltd acquired all the shares of Chocolat Ltd on 1 July 2018. All the net...
Salidou Ltd acquired all the shares of Chocolat Ltd on 1 July
2018. All the net assets of Chocolat Ltd were at fair value at the
date of acquisition except for an equipment, which was below its
fair value. The remaining useful life of the equipment is 5 years.
At 30 June 2023, depreciation expense will need to be debited.
True
False
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