Question:The information that follows relates to equipment owned by
Coronado Limited at December 31, 2020:
Cost...
Question
The information that follows relates to equipment owned by
Coronado Limited at December 31, 2020:
Cost...
The information that follows relates to equipment owned by
Coronado Limited at December 31, 2020:
Cost
$10,800,000
Accumulated depreciation to date
1,200,000
Expected future net cash flows (undiscounted)
8,400,000
Expected future net cash flows (discounted, value in use)
7,620,000
Fair value
7,440,000
Costs to sell (costs of disposal)
60,000
Assume that Coronado will continue to use this asset in the future.
As at December 31, 2020, the equipment has a remaining useful life
of four years. Coronado uses the straight-line method of
depreciation.
(a)
Assume that Coronado is a private company that follows
ASPE.
1.
Prepare the journal entry at December 31, 2020, to record asset
impairment, if any.
2.
Prepare the journal entry to record depreciation expense for
2021.
3.
The equipment’s fair value at December 31, 2021 is $7.80
million. Prepare the journal entry, if any, to record the increase
in fair value.
(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 0 for
the amounts.)