Expected future net cash flows (discounted, value in use)
6,731,000
Fair value
6,572,000
Costs to sell (costs of disposal)
53,000
At December 31, 2017, Waterway discontinues use of the equipmentand intends to dispose of it in the coming year by selling it to acompetitor. It is expected that the costs of disposal will total$53,000. (Assume that Waterway is a private company that followsASPE.)
REQUIRED:
1a) Prepare the journal entry at December 31,2017, to record asset impairment, if any
b) Prepare the journal entry to record depreciation expense for2018.
c) Assume that the asset was not sold by December 31, 2018. Theequipmentâs fair value (and recoverable amount) on this date is$6.890 million. Prepare the journal entry, if any, to record theincrease in fair value. It is expected that the costs of disposalwill total $53,000
2) Repeat the requirements in (a) aboveassuming that Waterway is a public company that follows IFRS, andthat the asset meets all criteria for classification as an assetheld for sale
