Accounting Problem (Simple)

Instructions

Refer to Background to Complete Question 4 Part 1.png and Question 4 Part 2.png, Use the List of Accounts Below

List of Accounts

• Accumulated Depletion
• Accumulated Depreciation - Vehicles
• Accumulated Depreciation - Buildings
• Accumulated Depreciation - Equipment
• Accumulated Depreciation - Furniture
• Accumulated Depreciation - Machinery
• Accumulated Depreciation - Vehicles
• Accumulated Impairment Losses - Building
• Accumulated Impairment Losses - Equipment
• Accumulated Impairment Losses - Land
• Accumulated Impairment Losses - Machinery
• Accumulated Impairment Losses - Mine
• Accumulated Impairment Losses - Patents
• Accumulated Impairment Losses - Vehicles
• Allowance for Loss on Write-down of Held for Sale Assets
• Asset Retirement Obligation
• Buildings
• Cash
• Common Shares
• Contribution Expense
• Cost of Goods Sold
• Deferred Revenue - Government Grants
• Depreciation Expense
• Equipment
• Exploration Expense
• Furniture
• Gain on Disposal of Vehicles
• Gain on Disposal of Building
• Gain on Disposal of Equipment
• Gain on Disposal of Furniture
• Gain on Disposal of Machinery
• Gain on Disposal of Vehicle
• Gain on Disposal of Land
• Interest Expense
• Interest Payable
• Inventory
• Investment Property
• Land
• Loss on Disposal of Vehicles
• Loss on Disposal of Building
• Loss on Disposal of Equipment
• Loss on Disposal of Machinery
• Loss on Disposal of Land
• Loss on Disposal of Vehicles
• Loss on Expropriation
• Loss on Impairment
• Loss on Write-down of Held for Sale Assets
• Machinery
• Mineral Resources
• No Entry
• Notes Payable
• Oil Property
• Recovery of Loss from Impairment
• Recovery of Loss from Write-down of Held for Sale Assets
• Repairs and Maintenance Expense
• Retained Earnings
• Revaluation Surplus (OCI)
• Revenue - Government Grants
• Royalty Expense
• Vehicles

Background

The information that follows relates to equipment owned by Waterway Limited at December 31, 2020: Cost $10,980,000 Accumulated depreciation to date 1 220,000 Expected future net cash flows (undiscounted) 8,540.000 Expected future net cash flows (discounted, value in use) 7,747,000 Fair value 7,564,000 Costs to sell (costs of disposal) 61,000 Assume that Waterway will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Waterway uses the straight-line method of depreciation.Assume that Waterway is a private company that follows ASPE. 1. Prepare the journal entry at December 31, 2020, to record asset impairment, if any. 2. Prepare the journal entry to record depreciation expense for 2021. 3. The equipment's fair value at December 31, 2021 is $7.93 million. Prepare the journal entry, if any, to record the increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Date Account Titles and Explanation Debit Credit December (1 ) 31, 2020 (2) December 31, 2021 (3) December 31, 2021Repeat the requirements in (a) above assuming that Waterway is a public company that follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) NO. Date Account Titles and Explanation Debit Credit (1) December 31, 2020 (2) December 31, 2021 December (3) 31, 2021