Question
On January 1st 2009, a company purchases an asset for 90 million cash. In the future, the company will have to spend an additional 15
On January 1st 2009, a company purchases an asset for 90 million cash. In the future, the company will have to spend an additional 15 million to make the asset ready for use. The asset retirement costs at the end of its useful life of 17 years is estimated to be 30 million. The residual value is 3500000 and straight line is used. The discount rate is 7 percent. The company is a publicly trades company therefore it uses IFRS.
a) Write the journal entry to record the purchase of the asset on January 1st 2009.
B) write adjusting entries on december 31st 2009 and december 31st 2019.
c) On January 1st 2020 are re-estimated at 35 million. The useful life is reduced to 13 years. The discount rate is 5 percent. Write the journal entry to make a record of the change on January 1st 2020 and calculate depreciation expense on december 31st 2020.
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