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20 Jan 2019

Presented below is information related to equipment owned bySuarez Company at December 31, 2014.

Cost $ 12,582,000
Accumulated depreciation to date 1,398,000
Expected future net cash flows 9,786,000
Fair value 6,710,400


Assume that Suarez will continue to use this asset in the future.As of December 31, 2014, the equipment has a remaining useful lifeof 5 years.

Prepare the journal entry to record depreciation expensefor 2015.

The fair value of the equipment at December 31, 2015, is$7,129,800. Prepare the journal entry (if any) necessary to recordthis increase in fair value.

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Jamar Ferry
Jamar FerryLv2
22 Jan 2019

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Presented below is information related to copyrights owned byCrane Company at December 31, 2017.

The fair value of the copyright at December 31, 2018, is$3,490,000. Prepare the journal entry necessary to record theincrease in fair value.

The management of Petro Garcia Inc. was discussing whethercertain equipment should be written off as a charge to currentoperations because of obsolescence. This equipment has a cost of$900,000 with depreciation to date of $400,000 as of December 31,2014. On December 31, 2014, management projected its future netcash flows from this equipment to be $300,000 and its fair value tobe $230,000. The company intends to use this equipment in thefuture.

(a) Prepare the journal entry (if any) to record the impairmentat December 31, 2014.

(b) Where should the gain or loss (if any) on the write-down bereported in the income statement?

(c) At December 31, 2015, the equipment’s fair value increasedto $260,000. Prepare the journal entry (if any) to record thisincrease in fair value.

(d) What accounting issues did management face in accounting forthis impairment?

Presented below is information related to non-current assets owned by Marley Company at December 31, 2015.

Equipment Copyright

Cost $7 000 000 $2 700 000

Accumulated depreciation to date 1 500 000

Carrying amount - 2 350 000

Value-in-use 5 000 000

Fair value less cost of sell 4 400 000

Recoverable amount - 1 500 000

Assume that Marley will continue to use both assets in the future. As of December 31, 2015, the equipment had a remaining useful of 4 years and the copyrights had a remaining useful life of 5 years. Please show all workings and attach in order for me to copy and paste.Please and thank yiu.

Required:

(a) Prepare the journal entries (if any) to record the impairment of the assets at December 31, 2015. (16 marks)

(b) Prepare the journal entries to record depreciation and amortization expense for 2016. (14 marks)

(c) The recoverable amounts at December 31, 2016, of the equipment is $5 750 000 and the copyrights is $1 600 000. Prepare the journal entries (if any) necessary to account for impairment. (16 marks)

(d) What is the amount for depreciation and amortization for 2017? (6 marks)

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