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A company has an equipment that originally costs $2,000,000, and it has a current carrying amount...
5. Innovative Inc. has a piece of equipment with a carrying amount of $175,000. Technology has...
5. Innovative Inc. has a piece of equipment with a carrying amount of $175,000. Technology has changed, indicating that the machine may be impaired. A new machine with updated technology could be purchased for $350,000. A used machine of similar vintage is listed on-line for $160,000. The expected future cash flows from continuing to use the asset are $148,000. The estimated value if the company sold the asset less commission costs is $155,000. Required: 1) What is the recoverable amount?...
Innovative Inc. has a piece of equipment with a carrying amount of $176,500 Technology has changed,...
Innovative Inc. has a piece of equipment with a carrying amount of $176,500 Technology has changed, indicating that the machine may be impaired. A new machine with updated technology could be purchased for $351,000. A used machine of similar vintage is listed on-line for $161,000. The estimated discounted cash flows from continuing to use the asset are $149,000. The undiscounted cash flows from the use of the asset are $181,000. The estimated value if the company sold the asset less...
Page < 2 > of 4 0 9. Torque Co. has equipment with a carrying amount...
Page < 2 > of 4 0 9. Torque Co. has equipment with a carrying amount of $2,400,000. The expected future net cash flows from the equipment are $2,445,000, and its fair value is $2,040,000. The equipment is expected to be used in operations in the future. What amount (if any) should Torque report as an impairment to its equipment? A) No impairment should be reported. B) $360,000 C) $45,000 D) $405,000 Page 2
Coffee Company Limited has a trademark with a carrying amount of $83,750, and expected useful life...
Coffee Company Limited has a trademark with a carrying amount of $83,750, and expected useful life of 15 years. As part of an impairment test on December 31, 2020, due to a change in customer tastes, Coffee Company gathered the following data about the trademark for the purposes of an impairment test: fair value $45,000; fair value less costs to sell $40,000; value in use $95,200; and undiscounted future cash flows $125,000. Assume that Coffee Company is reporting under IFRS....
The Sparkle Ltd. Company has a trademark that it expects to have an indefinite life with...
The Sparkle Ltd. Company has a trademark that it expects to have an indefinite life with a carrying value of $1,500,000. As part of its 2018 annual impairment testing, Sparkle decides not to use the qualitative assessment option under U.S. GAAP and moves forward to performing its quantitative assessment impairment testing for both U.S. GAAP and IFRS. In this process, it is determined that the fair value of the trademark is $1,200,000. The present value of the future cash flows...
Use the following information to answer the next (2) questions: Pitchfork, Inc. has the following equipment...
Use the following information to answer the next (2) questions: Pitchfork, Inc. has the following equipment reported on their year-end balance sheet at December 31, 20x1. Conditions warrant that it be reviewed for potential impairment. Use the following information to answer the next (2) questions: Asset Classification Purchase Price Accumulated Depreciation Expected Future Cash Flows (undiscounted) Fair Value Remaining Useful Life Equip FJ-670 Operating Asset – continue in use $1,200,000 $541,500 $120,000/year $595,000 6 years 1. Assume Pitchfork complies with...
ACC206: Financial Reporting MCQ please help 1. According to FRS 16 Property, Plant and Equipment, gains...
ACC206: Financial Reporting MCQ please help 1. According to FRS 16 Property, Plant and Equipment, gains when selling property, plant and equipment for cash: a. are the excess of the cash proceeds over the fair value of the assets. b. are the excess of the book value of the assets over the cash proceeds. c. are part of cash flows from operations. d. None of the listed options. 2. At the end of its fiscal year, an adverse economic condition...
ACC206: Financial Accounting MCQ 2.0 1. HL Ltd purchased a high speed industrial equipment at a...
ACC206: Financial Accounting MCQ 2.0 1. HL Ltd purchased a high speed industrial equipment at a cost of $420,000. Shipping costs totalled $15,000. Foundation work has to be done to house the equipment at HL Ltd’s premises and costs $8,000. An additional water line had to be run to the equipment at a cost of $3,000. Labour and testing costs totalled $6,000. Materials used up in testing cost $3,000. Under FRS 16 Property, Plant and Equipment , the capitalised cost...
On January 1, 2016, Travis Company purchased machinery costing $3,000,000. The company uses straight-line depreciation assuming...
On January 1, 2016, Travis Company purchased machinery costing $3,000,000. The company uses straight-line depreciation assuming the machinery's useful life to be 10 years and its residual value to be $600,000. At the end of 2019, the company felt that technological advances had caused an impairment of its machinery and that the remaining useful life of the machinery was only four years. The company estimates the machinery will generate cash inflows of $850,000 and cash outflows of $100,000 over each...
Sunland Corporation owns a patent that has a carrying amount of $648,000. Sunland expects future net...
Sunland Corporation owns a patent that has a carrying amount of
$648,000. Sunland expects future net cash flows from this patent to
total $405,000. The fair value of the patent is $502,200.
Prepare journal entry, if necessary, to record the loss on
impairment. (Credit account titles are automatically
indented when the amount is entered. Do not indent
manually.)
Account Titles and Explanation
Debit
Credit
5. Innovative Inc. has a piece of equipment with a carrying amount of $175,000. Technology has changed, indicating that the machine may be impaired. A new machine with updated technology could be purchased for $350,000. A used machine of similar vintage is listed on-line for $160,000. The expected future cash flows from continuing to use the asset are $148,000. The estimated value if the company sold the asset less commission costs is $155,000. Required: 1) What is the recoverable amount?...
Innovative Inc. has a piece of equipment with a carrying amount of $176,500 Technology has changed, indicating that the machine may be impaired. A new machine with updated technology could be purchased for $351,000. A used machine of similar vintage is listed on-line for $161,000. The estimated discounted cash flows from continuing to use the asset are $149,000. The undiscounted cash flows from the use of the asset are $181,000. The estimated value if the company sold the asset less...
Page < 2 > of 4 0 9. Torque Co. has equipment with a carrying amount of $2,400,000. The expected future net cash flows from the equipment are $2,445,000, and its fair value is $2,040,000. The equipment is expected to be used in operations in the future. What amount (if any) should Torque report as an impairment to its equipment? A) No impairment should be reported. B) $360,000 C) $45,000 D) $405,000 Page 2
Sunland Corporation owns a patent that has a carrying amount of
$648,000. Sunland expects future net cash flows from this patent to
total $405,000. The fair value of the patent is $502,200.
Prepare journal entry, if necessary, to record the loss on
impairment. (Credit account titles are automatically
indented when the amount is entered. Do not indent
manually.)
Account Titles and Explanation
Debit
Credit
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