Monty Corporation purchased a new plant asset on April 1, 2020, at a cost of $864,000. It was estimated to have a useful life of 20 years and a residual value of $324,000, a physical life of 30 years, and a salvage value of $0. Monty's accounting period is the calendar year. Monty prepares financial statements in accordance with IFRS. (a) Calculate the depreciation for this asset for 2020 and 2021 using the straight-line method. (Round answers to decimal places, e.g. 5,275.) Depreciation 2020 $ 2021 $ Sheffield Corp. acquired a property on September 15, 2020, for $230,000, paying $3,900 in transfer taxes and a $1,800 real estate fee. Based on the provincial assessment information, 85% of the property's value was related to the building and 15% to the land. It is estimated that the building, with proper maintenance, will last for 20 years, at which time it will be torn down and have zero salvage value. Sheffield, however, expects to use it for 10 years only, as it is not expected to suit the company's purposes after that. The company should be able to sell the property for $176,000 at that time, with $44,000 of this amount being for the land. Sheffield prepares financial statements in accordance with IFRS. Depreciation expense should be calculated to the nearest half month. (a) Assuming a December 31 year end, identify the building's cost. Cost of the building $ Pronghorn Corp. purchased machinery for $417,000 on May 1, 2020. It is estimated that it will have a useful life of 10 years, residual value of $17,000, production of 200,000 units, and 20,000 working hours. The machinery will have a physical life of 15 years and a salvage value of $3,000. During 2021, Pronghorn Corp. used the machinery for 2,250 hours and the machinery produced 28,000 units. Pronghorn prepares financial statements in accordance with IFRS. From the information given, calculate the depreciation charge for 2021 under each of the following methods, assuming Pronghorn has a December 31 year end. (a) Calculate the depreciation charge for 2021 under straight-line method. Depreciation charge for 2021 $ The management of Sage Hill Inc., a small private company that uses the cost recovery impairment model, was discussing whether certain equipment should be written down as a charge to current operations because of obsolescence. The assets had a cost of $830,000, and depreciation of $320,000 had been taken to December 31, 2020. On December 31, 2020, management projected the undiscounted future net cash flows from this equipment to be $360,000, and its fair value to be $260,000. The company intends to use this equipment in the future. (a) Prepare the journal entry, if any, to record the impairment at December 31, 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 O for the amounts.) Debit Date Account Titles and Explanation December 31, 2020
