MGAB02H3 Lecture 3: Employment Insurance
Activity 5:
Carrying Value Depreciation expense per year:
Original Cost 50,000 ($ 50,.000/10) =
Accumulated Dep - end of Yr 2 10,000 ($ 5,000 x 2)
Carrying Value 40,000
recoverable Amount'
The higher of 30,000
Value in use 28,000
FV - cost to sell 30,000
Impairment : When the carrying value > recobverable amount
Impairment : $ 30,000 - $ 40,000) (10,000)
Loss due to impairment of equipment 10,000
Accumulated Depreciation - Equip 10,000
Year 3 :
Carrying Value after impairment Depreciation expense per year from Year 3:
Carrying value at time of impairment 30,000 Cost
(year 2) Remaining Life
Depreciation expense - Year 3 3,750 revised depreciation/year
Carrying Value - end of Year 3 26,250
Carrying Value pof equipment if no impairment :
Original cost 50,000
Accumulated depreciation (3 years) 15,000 ($ 5,000 x 3)
Carrying Value end of Y3 (No impairment) 35,000
Recovery from impairment (Yr)
$ 35,000 - $ 26,750 8,750
Accumulated depreciation 8,750
Recovery on impairment loss 8,750
handout Question - Chapter 8
July 1, 2016:
Total cost of equipment : $ 255,440 + $ 15,200 + $ 2,500 = 273,140
Equipment 273,140
cash 273,140
October 2, 2016:
Equipment 3,660
Cash 3,660
december 31, 2016:
Depreciation expense 29,970
Accumulated depreciation 29,970
Feb 17, 2017:
Repair expense 920
Cash 920
June 30, 2017:
Equipment 4,500
Cash 4,500
Depreciation expense 48,674
Accumulated depreciation 48,674
April 28, 2018:
depreciation expense 12,356
Accumulated depreciation 12,356
Cash 165,000
Accumulated dep 91,000
Loss on disposal of equip 25,300
Equipment 281,300
Paycheque - Employee
Gross Pay 1,000
- EI 40 Unemployment Insurance
- CPP 60 Canada Pension Plan
- Income Tax 250
- Union Dues 20
Net Pay 630
Wage expense 1,000
EI Payable 40
CPP Payable 60
Income Tax Payable 250
Uniond Dues Payable 20
Cash 630
Document Summary
Impairment : when the carrying value > recobverable amount. Carrying value at time of impairment (year 2) Carrying value pof equipment if no impairment : 5,000 expense per year from year 3: ciation/year. 35,850 ($ 34,740 + $ remaining life revised depreciation per year. 30,140 ($ 60,280/2) depreciation expense per year after june 30: 37,068 (4 - 1 + 2) depreciation expense (july 1 - dec 31) Same amout as the employee (1. 4 x $ 40) Jason bought an equipment in 2017 for $ 50,0. At the end of year 2, the value in use for the e. At the end of year 3, the fair value of the equi. Prepare the journal entries in year 2 and 3. The equipment is estimated to last for 10 he equipment is $ 28,000 and the fair value on th equipment is estimated to be $ 42,000 due to the or 10 years.