Part B

ABC Inc. commenced operations on January 1, Year 1. Early in year 1 ABC purchased an unlimited life intangible asset for $5,000,000. There is an active market and no significant costs to sell this intangible. ABC follows IFRS, and applies the revaluation model for its unlimited life intangibles.

The following are the fair values of this asset for Years 1 to 3:

Year 1 Year 2 Year 3

Fair Value $ 4,500,000 $ 7,000,000 $ 5,800,000

Required:

1. Show the revaluation journal entries for each year.
2. Show the effects on net income and change in shareholders equity for each year.

Part A (9 marks) Jane Corporation follows ASPE. On January 10, 2012 Jane purchased a technology company paying $1,900,000. It is the end of 2012 and Jane Corp. is performing its annual test of impairment. Jane has determined the fair value of the technology reporting unit to be $1,700,000 at December 31st and the fair value and carrying value of the assets and liabilities were determined as follows: Investments Accounts receivable Inventory Equipment Patents Accounts payable Long-term debt Fair Value January 10, 2012 Fair value December 31, 2012 200,000 200,000 250,000 250,000 350,000 400,000 700,000 700,000 400,000 450,000 200,000 200,000 300,000 300,000 1,400,000 1,500,000 1. Record the acquisition of the technology company. 2. Record impairment, if any, at year end. Show computations