Hydrangea Metals is a mining company that had been renting out an old sluice box to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Hydrangea Metals is a mining company that had been renting out an old sluice box to other small mining operations in the area. However, in 2020, the equipment started to have significant down time due to mechanical break downs. The following related to the equipment at December 31, 2020: Cost: Accumulated depreciation Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell (costs of disposal) Assume that Hydrangea will continue to use this asset in the future. As at Dec. 31, 2020, the equipment has a remaining useful life of 4 years. Hydrangea uses straight line depreciation. $20,000 10,000 4,000 3,170 2.400 0. 7.1 Assuming the company follows ASPE and uses the cost recovery impairment model, prepare the journal entries for impairment if any, on Dec. 31. 2020. If no entry is required, explain why. 7.2 At December 31, 2021, due to an unexpected market demand for metals, the equipment's fair value increased to $3.500. Briefly describe how the company should record this increase in fair value under this cost recovery model. 7.3 Assuming the company follows IFRS and uses the rational entity impalrment model, prepare the journal entries for impairment if any, on Dec. 31. 2020. If no entry is required. explain why. ED STATES) Hydrangea Metals is a mining company that had been renting out an old sluice box to other small mining operations in the area. However, in 2020, the equipment started to have significant down time due to mechanical break downs. The following related to the equipment at December 31, 2020: Cost: Accumulated depreciation Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell (costs of disposal) Assume that Hydrangea will continue to use this asset in the future. As at Dec. 31, 2020, the equipment has a remaining useful life of 4 years. Hydrangea uses straight line depreciation. $20,000 10,000 4,000 3,170 2.400 0. 7.1 Assuming the company follows ASPE and uses the cost recovery impairment model, prepare the journal entries for impairment if any, on Dec. 31. 2020. If no entry is required, explain why. 7.2 At December 31, 2021, due to an unexpected market demand for metals, the equipment's fair value increased to $3.500. Briefly describe how the company should record this increase in fair value under this cost recovery model. 7.3 Assuming the company follows IFRS and uses the rational entity impalrment model, prepare the journal entries for impairment if any, on Dec. 31. 2020. If no entry is required. explain why. ED STATES)
Expert Answer:
Related Book For
Accounting Business Reporting for Decision Making
ISBN: 9780730302414
4th edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver
Posted Date:
Students also viewed these accounting questions
-
Dominum Corporation is a mining company that mines, produces, and markets teledine, a common mineral substance. The mineral is mined and produced in one large batch per year, as the mine is...
-
Massey Energy (MEE) is a mining company that processes and ships coal, operating 30 underground mines and 13 surface mines in West Virginia, Kentucky and Virginia. The company's steam coal is...
-
Pan American Silver Corp. is a mining company based in British Columbia. In a recent quarter, it reported the following activities: Required: 1. Based on this information, present the investing and...
-
A manufacturer claims that the average tensile strength of thread A exceeds the average tensile strength of thread B by at least 12 kilograms. To test his claim, 50 pieces of each type of thread are...
-
The income statements for the Fresh Sandwich Company for 2009 and 2010 are given below. Your boss wants you to prepare a pro forma income statement for 2011 using the same percentage increases as...
-
Alex Briem works exclusively from home as an employed salesperson for SET Co., and during the year Alex earned $21,000 from SET Co. Alex's office occupies 8% of the home's square footage. The costs...
-
Suppose you buy a new home and finance \(90 \%\) of the price with a mortgage from a bank. Suppose that a few years later the value of your home falls below your mortgage balance and you decide to...
-
Humble Company has provided the following budget information for the first quarter of 2016: Total sales ....................$ 208,000 Budgeted purchases of direct materials ....... 40,150 Budgeted...
-
Tax on purchases during the year Interest from a savings account Interest from City of Boston Bonds Dividend from 3 M stock $ 1 , 4 0 0 5 0 0 9 , 0 0 0 2 , 6 0 0 1 , 0 0 0 6 , 2 0 0 8 0 0 7 0 0 4 0 0...
-
Snowball, Inc. makes snowboards, which it sells to Ronnie's Sports Store. Ronnie's Sports Store sells Snowball snowboards to consumers, including Ed. Ed is injured while using the snowboard. In a...
-
a. Received $62,250 cash from customers on 1/1 for subscriptions that had already been earned and charged on account in 2020. b. Purchased 10 new computer servers for $34,200 on 1/2; paid $15,300...
-
The Management of Hindustan Ltd. is not happy with the company's current budgetary planning and control system and would wish to see it more effective than it is currently. For this purpose, you have...
-
Solve the equation. 112. 8x+15=-1 113. 9(x-5)=27 114. 2x-13=7-2x 115. 3(2x+1)=7(1+x) 116. 2-4(x-5)=5(x+1)-37 3x-2=2 117. 5
-
Wob-solutions Ltd. was formed ten years ago to provide business equipment solutions to local business. It has separate divisions for research, marketing, product design, technology and communication...
-
Short report You score a job as an intern for a small paper supply company for the summer called the Creed Bratton Paper Company. The CEO is a nice enough guy, although sometimes he shows up for...
-
SunTech Corp. is a newly established US company. The current net income of the company is $23 million US dollars. The company has issued both preferred and common shares. No dividends will be paid on...
-
General Ledger General Ledger Account Description Code Code 11000 Cash 41001 12000 Investments 41002 Contributions Account Description In kind contributions 13000 Pledges receivable 42000 Net Assets...
-
Havel says the grocer doesnt believe what is on the sign and indeed, he says the grocers customers will barely notice it. But Havel maintains that the sign serves a specific function. How would you...
-
Stafford Ltd has recently expanded its production facility to satisfy a new customer order that will start in six months. As a consequence, they will have the opportunity to make use of the spare...
-
Outline the advantages and disadvantages in using non-financial performance indicators?
-
Compare and contrast the views of Hobbes with those of Smith and Friedman.
-
A container of an organic liquid a $25^{\circ} \mathrm{C}$ has a mass of $1100 \mathrm{~kg}$ and a volume of $0.94 \mathrm{~m}^{3}$. Find the liquid's weight, its density, and its specific gravity.
-
What is the pressure one mile $(1.6 \mathrm{~km})$ beneath the ocean's surface?
-
A vertical, cylindrical tank with a diameter of $10 \mathrm{~m}$ and a depth of $4 \mathrm{~m}$ is filled to the top with water at $25^{\circ} \mathrm{C}$. If the water is heated to $60^{\circ}...
Study smarter with the SolutionInn App