Reference no: EM132576613
Question - Impairment-Cost Recovery and Rational Entity Models
The information that follows relates to equipment owned by Gaurav Limited at December 31, 2017:
Cost $10,000,000
Accumulated depreciation to date 2,000,000
Expected future net cash flows (undiscounted) 7,000,000
Expected future net cash flows (discounted, value in use) 6,350,000
Fair value 6,200,000
Costs to sell (costs of disposal) 50,000
Assume that Gaurav will continue to use this asset in the future. As at December 31, 2017, the equipment has a remaining useful life of four years. Gaurav uses the straight-line method of depreciation.
Instructions -
(a) Assume that Gaurav is a private company that follows ASPE.
1. Prepare the journal entry at December 31, 2017, to record asset impairment, if any.
2. Prepare the journal entry to record depreciation expense for 2018.
3. The equipment's fair value at December 31, 2018, is $6.5 million. Prepare the journal entry, if any, to record the increase in fair value.
(b) Repeat the requirements in (a) above assuming that Gaurav is a public company that follows IFRS.
(c) Referring to the qualitative characteristics identified in the conceptual framework for financial reporting (discussed in Chapter 2), discuss the differences between the cost recovery impairment model and the rational entity impairment model. Which method is preferred?
|
Record the adjustment for uncollectible accounts
: Record the adjustment for uncollectible accounts at the end of the first year of operations using the 3% estimate of accounts receivable
|
|
Would simply times two by the three workers
: Would simply times 2 by the three workers then by $30 per hour? There are three assembly employees that spend 2 hours each, $30 per hour to make
|
|
Change of leadership influence the future direction
: How will the change of leadership influence the future direction of an organization?
|
|
Describe the application form for funding
: You are required to submit a research proposal for a three-year project in responding to the Gates Foundation call for funding applications.
|
|
Prepare journal entry to record the increase fair value
: The equipment's fair value at December 31, 2018, is $6.5 million. Prepare the journal entry, if any, to record the increase in fair value
|
|
Calculate the comparative operating incomes
: Calculate the comparative Operating Incomes, Net Income, Operating income percentage, and Contribution margin percentage for 2017 and 2018.
|
|
Quebecor printing is commercial printing
: Quebecor Printing is a commercial printing company that is expanding, acquiring ailing printing companies, and moving into international markets.
|
|
Describe at least one federal regulation for healthcare
: Describe the geographic distribution, academic credentials, practice positions, and licensure status of members of the board for your specific region/area.
|
|
Write all journal entries necessary to properly account
: Write all 2017 journal entries necessary to properly account for the investment in the Scotia Corp. shares
|