On January 1, 2022, SNN Group purchased equipment for $500,000. This equipment is expected to have...

 

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On January 1, 2022, SNN Group purchased equipment for $500,000. This equipment is expected to have a 10-year useful life with no residual value. SNN chooses to revalue the equipment (i.e., revaluation model) and use the elimination method for the accumulated depreciation at the end of every year. SNN has the following information related to the equipment: Date Dec.31, 2022 Dec 31, 2023 Fair Value $477,000 $390,000 Required: (a) Prepare journal entries related to the equipment at the end of 2022. (Note: journal entry for purchase is not needed) [4 marks] (b) Prepare journal entries related to the equipment at the end of 2023 [5 marks] Part B [8 marks]: Clark Corp. has $30 million of goodwill on its book from the 2010 acquisition of Bix Ltd. Clark owns 100% of Bix, and records Bix assets at historical cost. At the end of 2016 fiscal year, the annual goodwill impairment test reveals the following information: Fair value of Bix less costs-to-sell Book value of Bix net assets (including the goodwill of $30 million) Present value of estimated future cash flows from Bix's operations. Required: (a) Prepare the journal entry for impairment loss that Clark Corp. should recognize according to International Financial Reporting Standard (IFRS) in 2016. Show necessary calculation. For this journal entry, if it is necessary, use the name "Identifiable Assets" to represent all the identifiable assets of Bix that need impairment. Show necessary calculations. [4 marks] $790 million $850 million $800 million (b) During the fiscal year 2017, the depreciation expense related to Bix Assets was $80 million. This depreciation would have been $82 million if there was no impairment in the previous year. Because of a sudden change in government regulation, Clark Corp. makes the following assessments at the end of fiscal year 2017: Fair value of Bix less costs-to-sell Present value of estimated future cash flows from Bix's operations. $760 million $750 million Prepare the journal entry to record any impairment loss or impairment loss reversal in 2017. For this journal entry, if it is necessary, use the name "Identifiable Assets" to represent all the identifiable assets of Bix that are impaired. Show necessary calculations. [4 marks] On January 1, 2022, SNN Group purchased equipment for $500,000. This equipment is expected to have a 10-year useful life with no residual value. SNN chooses to revalue the equipment (i.e., revaluation model) and use the elimination method for the accumulated depreciation at the end of every year. SNN has the following information related to the equipment: Date Dec.31, 2022 Dec 31, 2023 Fair Value $477,000 $390,000 Required: (a) Prepare journal entries related to the equipment at the end of 2022. (Note: journal entry for purchase is not needed) [4 marks] (b) Prepare journal entries related to the equipment at the end of 2023 [5 marks] Part B [8 marks]: Clark Corp. has $30 million of goodwill on its book from the 2010 acquisition of Bix Ltd. Clark owns 100% of Bix, and records Bix assets at historical cost. At the end of 2016 fiscal year, the annual goodwill impairment test reveals the following information: Fair value of Bix less costs-to-sell Book value of Bix net assets (including the goodwill of $30 million) Present value of estimated future cash flows from Bix's operations. Required: (a) Prepare the journal entry for impairment loss that Clark Corp. should recognize according to International Financial Reporting Standard (IFRS) in 2016. Show necessary calculation. For this journal entry, if it is necessary, use the name "Identifiable Assets" to represent all the identifiable assets of Bix that need impairment. Show necessary calculations. [4 marks] $790 million $850 million $800 million (b) During the fiscal year 2017, the depreciation expense related to Bix Assets was $80 million. This depreciation would have been $82 million if there was no impairment in the previous year. Because of a sudden change in government regulation, Clark Corp. makes the following assessments at the end of fiscal year 2017: Fair value of Bix less costs-to-sell Present value of estimated future cash flows from Bix's operations. $760 million $750 million Prepare the journal entry to record any impairment loss or impairment loss reversal in 2017. For this journal entry, if it is necessary, use the name "Identifiable Assets" to represent all the identifiable assets of Bix that are impaired. Show necessary calculations. [4 marks]

Answer rating: 100% (QA)

Answer Step 1 Part B 1 Journal Entry for Impairment Loss for the year 2016 Year 2016 Book Value of I... View the full answer