Reference no: EM132907472
Question - The information that follows relates to equipment owned by Bonita Limited at December 31, 2020:
Cost $7,920,000
Accumulated depreciation to date 880,000
Expected future net cash flows (undiscounted) 6,160,000
Expected future net cash flows (discounted, value in use) 5,588,000
Fair value 5,456,000
Costs to sell (costs of disposal) 44,000
Assume that Bonita will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Bonita uses the straight-line method of depreciation.
Assume that Bonita is a private company that follows ASPE.
1. Prepare the journal entry at December 31, 2020, to record asset impairment, if any.
2. Prepare the journal entry to record depreciation expense for 2021.3.
The equipment's fair value at December 31, 2021 is $5.72 million. Prepare the journal entry, if any, to record the increase in fair value.
Repeat the requirements in (a) above assuming that Bonita is a public company that follows IFRS.
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