Question 2 (1 point)

Hughes Excavating Corp. (HEC) sold an excavator to Boon Docks Inc. (BDI). HEC agreed to accept $15,000 cash and a recreational property with a small cabin on it as payment for the excavator. Pertinent details follow:

The sale of the excavator was incidental to HECs primary revenue-generating activities of excavating building sites.

HEC reports its financial results in accordance with IFRS.

The transaction is deemed to have commercial substance.

HEC originally paid $130,000 for the excavator. Its net book value at the time of the exchange was $84,000.

There is an active market for the excavator that HEC sold to BDI. Based on recent similar transactions, the fair value of the excavator is estimated to be $96,000.

The latest government-assessed value of the land and buildings was $90,000 $60,000 allocated to land and $30,000 to the cabin. While government assessments are prepared for the purpose of assessing property taxes rather than estimating actual market values, they are frequently used to estimate relative fair values of the component parts. There have not been any recent sales of similar properties in the area.

When HEC prepares the journal entry to record the transaction, at what amount will the company debit the land account?

Question 2 options:

$46,000

$54,000

$60,000

$81,000

Question 3 (1 point)

Evolution Corp. follows the proportional method for revaluation of its property, plant, and equipment. On December 31, 20X3, Evolution paid $200,000 for vacant land and elected to subsequently value it using the revaluation model. It is now December 31, 20X7. A summary of the lands fair value at Evolutions intervening year end follows:

December 31, 20X4 $170,000

December 31, 20X5 $195,000

December 31, 20X6 $190,000

December 31, 20X7 $240,000

How should Evolution report the revaluation of the land on its December 31, 20X7, statement of comprehensive income?

*ROL revaluation of land

Question 3 options:

Credit $10,000 gain ROL* profit or loss and $40,000 gain ROL OCI

Credit $40,000 gain ROL profit or loss and $10,000 gain ROL OCI

Credit $50,000 gain ROL OCI

Credit $50,000 gain ROL profit or loss

Question 4 (1 point)

Which of the following statements regarding the accounting treatment of intangible assets under IFRS is true?

Question 4 options:

All intangible assets have an indefinite useful life.

All intangible assets are internally generated.

All intangible assets should be tested for impairment.

All intangible assets are subsequently measured using the cost model.

Question 5 (1 point)

On August 31, 20X8, Gamma Corp. decided to sell its retail division. Upon review of the relevant facts, Gamma decided to account for this division as a discontinued operation. After the asset group was listed for sale, a broker was able to source an offshore buyer for the unit, and on October 31, 20X8, Gamma received a binding offer. Gamma agreed to pay a higher-than-expected sales commission due to the unique nature of the offer. Gamma prepares monthly financial statements and reports its financial results in accordance with IFRS.

August 31, 20X8

Carrying amount $15,000,000

Fair value 15,400,000

Estimated costs to sell 300,000

October 31, 20X8

Fair value (binding offer price) $15,500,000

Costs to sell (agreed-upon sales commission) 600,000

What amount of impairment loss (recovery), if any, should Gamma report on its October 31 financial statements?

Question 5 options:

($200,000)

$0

$100,000

$200,000