Reference no: EM132603614

Question - Ingleside Paper Company (IPC) has some equipment that was recently evaluated for impairment in response to changing economic conditions in the industry. The equipment was purchased back in 2009 for $37,500. At the acquisition date, the equipment had an estimated useful life of 15 years with no estimated residual value. SPP uses the straight-line method of depreciation and records a full year of depreciation in the year of acquisition. The company has a December 31 year-end.

On January 1, 2015, SPP wrote down the equipment for impairment because of a decline in prices of newsprint and other paper products. The recoverable amount of the equipment was estimated to be $12,200.

Prices of paper products later recovered. On January 1, 2019, the company re-evaluated the impairment of its equipment. The new recoverable amount for the equipment was $8,000. IPC follows IFRS.

Required -

(a) Calculate the amount of any impairment loss for 2015.

(b) Prepare the journal entry on December 31, 2015 to record annual depreciation expense.

(c) Calculate the amount of any impairment recovery for 2019.

(d) Prepare the journal entry on December 31, 2019 to record annual depreciation expense.