Ramshare Company acquired equipment at the beginning of 2011 at a cost of $100,000 The equipment has a five year life with no expected salvage value and is depreciated on a straight line basis At December 31, 2011, Ramshare compiled the following information related to this equipment Expected futur...

a 1 Under US GAAP an asset is impaired when its carrying value exceeds the expected future cash flows undiscounted to be derived from use of the asset ...

Ramshare Company acquired equipment at the beginning of 2011 at a cost of $100,000. The equipment has

Question:

Ramshare Company acquired equipment at the beginning of 2011 at a cost of $100,000. The equipment has a five-year life with no expected and is depreciated on a straight-line basis. At December 31, 2011, Ramshare compiled the following information related to this equipment:
Expected future cash flows from use of the equipment .......... $85,000
Present value of expected future cash flows from use of the equipment .... 75,000
Fair value (net selling price), less costs to dispose ............. 72,000
a. Determine the amount at which Ramshare should carry this equipment on its December 31, 2011, and the amount, if any, that it should report in net income related to this inventory using (1) U.S. and (2) IFRS.
b. Determine the adjustments that Ramshare would make in 2011 and 2012 to reconcile net income and stockholders’ equity under U.S. to IFRS. Ignore the possibility of any additional impairment at the end of 2010.

GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...