Consider the following independent situations for Kwok Corporation. Kwok applies ASPE.
Situation 1: Kwok purchased equipment in 2010 for $120,000 and estimated a $12,000 residual value at the end of the equipment's 10-year useful life. At December 31, 2016, there was $75,600 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2017, the equipment was sold for $28,000.
Situation 2: Kwok sold a piece of machinery for $10,000 on July 31, 2017. The machine originally cost $38,000 on January 1, 2009. It was estimated that the machine would have a useful life of 12 years with a residual value of $2,000, and the straight-line method of depreciation was used.
Situation 3: Kwok sold equipment that had a carrying amount of $3,500 for $5,200. The equipment originally cost $12,000 and it is estimated that it would cost $16,000 to replace the equipment.
Instructions
(a) Prepare the appropriate journal entries to record the disposition of the property, plant, and equipment assets, assuming that Kwok's fiscal year end is December 31 and that Kwok only prepares financial statements and adjusts the accounts annually.
(b) How would the journal entries in (a) change if Kwok Corporation applied IFRS?