Chapter 19 Problem 19-30 to 35
Problem 19-30 Answer C
Cost, January 1, 2005 800,000
Accumulated depreciation, December 31, 2007 (100,000 x 3) 300,000
Book value, December 31, 2007 500,000
Recoverable value 200,000
Impairment loss 300,000
The loss is recorded as follows:
Impairment loss 300,000
Accumulated depreciation 300,000
Cost 800,000
Accumulated depreciation (300,000 + 300,000) 600,000
Recoverable value, January 1, 2008 200,000
Depreciation for 2008 (200,000 / 5) 40,000
Book value, December 31, 2008 160,000
Problem 19-31 Answer B
From August 31, 2005 to May 31, 2008 is a period of 33 months. Thus, the remaining life of the machine is 27 months, 60 months original life minus 33.
Depreciation for the month of June 2008 (1,350,000 / 27 months) 50,000
Cost 3,200,000
Accumulated depreciation – 5/31/2008 (3,200,000 – 500,000 x 33/60) 1,485,000
Book value – 5/31/2008 1,715,000
Fair value 1,350,000
Impairment loss 365,000
Problem 19-32 Answer B
Cost – January 1, 2004 1,000,000
Accumulated depreciation, December 31, 2007 (900,000 / 10 x 4) 360,000
Book value, December 31, 2007 640,000
Depreciation for 2008 (640,000 – 40,000 / 4) 150,000
Book value, December 31, 2008 490,000
Problem 19-33 Answer C
Book value, 1/1/2008 2,400,000
Depreciation for 2008 (1,600,000 / 4) 400,000
Book value, 12/31/2008 2,000,000
Sales price-recoverable value 650,000 Impairment loss 1,350,000
Problem 19-34 Answer C
Depreciation for 2008 (10% x 2,000,000) 200,000
Cost – 1/2/2004 2,000,000
Accumulated depreciation - 12/31/08 (200,000 x 5) 1,000,000
Book value-12/31/2008 1,000,000
Estimated cost of disposal 50,000
Impairment loss 1,050,000
Problem 19-35 Answer C
Cost 2,000,000
Accumulated depreciation – 1/1/2008 (2,000,000 – 100,000 / 10 x 2.5) 475,000
Book value – 1/1/2008 1,525,000
Fair value 600,000
Impairment loss 925,000
� J � � � � G ��F 15,000,000 .857 12,855,000 2010 15,000,000 .794 11,910,000
2011 12,000,000 .735 8,820,000
60,000,000
Total value in use 50,325,000
2. The recoverable amount is the value in use of P50,325,000 because this is higher than the
fair value less cost to sell of P48,000,000.
3. Impairment loss 14,675,000
Accumulated depreciation (65,000,000 – 50,325,000) 14,675,000
4. Depreciation 12,581,250
Accumulated depreciation (50,325,000 / 4) 12,581,250
Problem 19-20
1. Depreciation 1,000,000
Accumulated depreciation (10,000,000 / 10) 1,000,000
2. Depreciation 1,000,000
Accumulated depreciation 1,000,000
3. Impairment loss 2,000,000
Accumulated depreciation 2,000,000
4. Depreciation 750,000
Accumulated depreciation (6,000,000 / 8) 750,000
5. Accumulated depreciation 1,750,000
Gain on impairment recovery 1,750,000
Cost – 1/1/2006 10,000,000
Accumulated depreciation (10,000,000 / 10 x 2) 2,000,000
Book value – 12/31/2007 8,000,000
Impairment loss – 2007 2,000,000
Adjusted book value – 12/31/2007 6,000,000
Depreciation – 2008 (6,000,000 / 8) 750,000
Book value – 12/31/2008 5,250,000
Cost – 1/1/2006 10,000,000
Accumulated depreciation (10,000,000 / 10 x 3) 3,000,000
Book value – 12/31/2008 (assuming no impairment) 7,000,000
Recorded book value 5,250,000
Gain on reversal of impairment 1,750,000
The fair value or recoverable value of P7,500,000 cannot exceed the “book value” that would have been determined assuming no impairment is recognized.
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