Short Track Speed Skating, a public company, purchased equipment on January 10, 2010, for $600,000. At that

Question:

Short Track Speed Skating, a public company, purchased equipment on January 10, 2010, for $600,000. At that time, management estimated that the equipment would have a useful life of 10 years and a residual value of $25,000. Short Track uses the straight-line method of depreciation and has a December 31 year end.
Short Track tested the equipment for impairment on December 31, 2014, aft er recording the annual depreciation expense. It was determined that the equipment's recoverable amount was $260,000, and that the total estimated useful life would be seven years instead of ten, with a residual value of $10,000 instead of $25,000.
Instructions
(a) Calculate the annual depreciation expense for the years 2010 to 2014 and the carrying amount at December 31, 2014.
(b) Record the impairment loss, if any, on December 31, 2014.
(c) What will appear on Short Track's 2014 income statement and with regard to this equipment?
(d) Assuming no further impairments or recoveries, calculate the annual depreciation expense for the years 2015 and 2016.
(e) Determine the equipment's accumulated depreciation and carrying amount at the end of its useful life.
TAKING IT FURTHER
Suggest some possible reasons as to why the IFRS accounting standards result in recording impairments of long-lived assets more frequently than ASPE.
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...