Homework Answers
| a.) | Annual Depreciation | 20,000 | =500000/25 |
| Book Value on December 31, year 4 | 460,000 | =500000-(20000*2) | |
| Recoverable Amount | 400,000 | ||
| Amount of Impairment loss | $ 60,000 | =460000-400000 | |
| Account Titles | Debit $ | Credit $ | ||
| Loss on Impairment | 60,000 | |||
| Building | 60,000 |
| b.) | Depreciation for Year 5 | 17,391 | =400000/23 |
| Depreciation for Year 6 | 17,391 | =400000/23 | |
| Book Value on December 31, year 6 | 365,218 | =400000-17391-17391 | |
| Recoverable Amount | 450,000 | ||
| Reversal of Loss | $ 84,782 | =450000-365218 | |
| Account Titles | Debit $ | Credit $ | ||
| Building | 84,782 | |||
| Gain on Impaiment Reversal | 60,000 | |||
| Revaluation Surplus | 24,782 | |||
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