Question
1)The information that follows relates to equipment owned by Coronado Limited at December 31, 2020: Cost $8,100,000 Accumulated depreciation to date 900,000 Expected future net
1)The information that follows relates to equipment owned by Coronado Limited at December 31, 2020:
Cost | $8,100,000 | |
Accumulated depreciation to date | 900,000 | |
Expected future net cash flows (undiscounted) | 6,300,000 | |
Expected future net cash flows (discounted, value in use) | 5,715,000 | |
Fair value | 5,580,000 | |
Costs to sell (costs of disposal) | 45,000 |
Assume that Coronado will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Coronado uses the straight-line method of depreciation.
Assume that Coronado is a private company that follows ASPE.
1. | Prepare the journal entry at December 31, 2020, to record asset impairment, if any. | |
2. | Prepare the journal entry to record depreciation expense for 2021. | |
3. | The equipments fair value at December 31, 2021 is $5.85 million. Prepare the journal entry, if any, to record the increase in fair value. |
No. | Date | Account Titles and Explanation | Debit | Credit |
---|---|---|---|---|
(1) | December 31, 2020 | enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount | ||
(2) | December 31, 2021 | enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount | ||
(3) | December 31, 2021 | enter an account title | enter a debit amount | enter a credit amount |
enter an account title |
Repeat the requirements in (a) above assuming that Coronado is a public company that follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
No. | Date | Account Titles and Explanation | Debit | Credit |
---|---|---|---|---|
(1) | December 31, 2020 | enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount | ||
(2) | December 31, 2021 | enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount | ||
(3) | December 31, 2021 | enter an account title | enter a debit amount |
2)Machinery purchased for $61,600 by Pronghorn Corp. on January 1, 2015, was originally estimated to have an 8-year useful life with a residual value of $4,000. Depreciation has been entered for five years on this basis. In 2020, it is determined that the total estimated useful life (including 2020) should have been 10 years, with a residual value of $4,900 at the end of that time. Assume straight-line depreciation and that Pronghorn Corp. uses IFRS for financial statement purposes.
Prepare the entry that is required to correct the prior years depreciation, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation | Debit | Credit |
---|---|---|
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount
|
Prepare the entry to record depreciation for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation | Debit | Credit
|
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Repeat part (b) assuming Pronghorn Corp. uses ASPE and the machinery is originally estimated to have a physical life of 8.5 years and a salvage value of $0. In 2020, it is determined that the total estimated physical life (including 2020) should have been 11 years, with a salvage value of $400 at the end of that time. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Account Titles and Explanation | Debit | Credit |
---|
Repeat part (b) assuming Pronghorn Corp. uses the double-declining-balance method of depreciation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Account Titles and Explanation | Debit | Credit |
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