Reference no: EM132483718
The information that follows relates to equipment owned by Waterway Limited at December 31, 2017:
Cost $8,280,000
Accumulated depreciation to date 920,000
Expected future net cash flows (undiscounted) 6,440,000
Expected future net cash flows (discounted, value in use) 5,842,000
Fair value 5,704,000
Costs to sell (costs of disposal) 46,000
Assume that Waterway will continue to use this asset in the future. As at December 31,2017, the equipment has a remaining useful life of four years. Waterway uses the straight-line method of depreciation.
Required: (round all answers to 0 decimal place)
a) Assume that Waterway is a private company that follows ASPE.
Question 1. Prepare the journal entry at December 31, 2017, to record asset impairment, if any and state the model you used to calculate the impairment if any
Question 2. Prepare the journal entry to record depreciation expense for 2018.
Question 3. The equipment's fair value at December 31, 2018, is $5.98 million. Prepare the journal entry, if any, to record the increase in fair value.
b) Repeat the requirements in (a) above assuming that Waterway is a public company that follows IFRS.