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Explain the difference between impairment and depreciation

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Reference no: EM132546181

At 31 December 2018, Prince Ltd reported these non-current assets:

                                                                        $                       $

Building 318,000

Less: Accumulated depreciation       145,200             172,800

Equipment 720,000

Less: Accumulated depreciation         288,000             432,000

Total non-current assets 604,800

During 2019, the following selected transactions occurred:

May 1 Sold equipment that cost $720,000 for $420,000.

June 30 There was an indication that the building could be impaired due to flooding, Prince Ltd calculated the recoverable amount of the building. The net selling price was $155,000 and the value in use was estimated to be $147,000.

Prince Ltd uses straight-line depreciation for buildings and equipment. The building is estimated to have a 40-year useful life and no residual value. The equipment is estimated to have a 10-year useful life and no residual value.

Required

Question a) Journalise the transactions that occurred during 2019

Question b) Explain the difference between impairment and depreciation

Reference no: EM132546181

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