Skebus Inc. is an internationally active producer of learning software, and applies IFRS in its

financial reporting. This mini$-$case investigates Skebus Inc.$$s accounting for PPE, provisions

and intangible assets, applying IAS $16,$ IAS $36,$ IAS $37$ and IAS $38,$ and revenue recognition

according to IFRS $15.$

$(1)$ On Jan $1,$ X$0,$ Skebus Inc. acquires a new machine for CU $50$ that is recognized under IAS

$16.$ Depreciation is calculated according to the straight$-$line method, useful life: $6$ years,

residual value of CU $8.$ On Dec $31,$ X$2,$ Skebus Inc. decides to use the machine for only $2$

more years, and estimates its then residual value to be $11$ CU$.$ On Dec, X$3,$ the machine$$s

value in use is estimated at $7$ CU$,$ the fair value was $9,5$ CU $($with incremental costs caused by

a sale of $3).$

Required: Calculate the $($a$)$ Carrying value of the machine $($a$)$ on Dec $31$ X$1,$ Dec $31,$ X$2$

and Dec $31,$ X$3,$ and $($b$)$ prepare the necessary entries in Skebus Inc.$$s financial

statements as of Dec $31$ X$2$ and X$3.$

$(2)$ On Jan $01,$ X$1,$ Skebus Inc acquires land for CU $40.$ Payment is effected in cash

immediately. The piece of land is measured according to the revaluation model after

recognition. Fair value of the land changes as follows:

X$1$: $44$ X$2$: $36$ X$3$: $48$

Required: $($a$)$ Prepare the necessary entries in Skebus$$s financial statements as of Dec $31$

for the years X$1,$ X$2,$ X$3$ and decide if the change in value affects $/$does not affect net

income.

$($b$)$ What is the carrying amount of the revaluation surplus on Dec $31,$ X$3?$

$(3)$ Skebus Inc $$s statement of financial position as of Jan $1,$ X$0,$ includes a provision for a

law suit by a former employee, the carrying amount of that provision is $600$ CU$.$ In march X$0,$

a judgment is rendered. The firm has to pay the former employee a severance payment of $400$

CU$.$ It has to make the payment immediately.

Required: Prepare the resulting journal entry!