Question $1(10$ marks$)$

On March $17$ of Year $3,$ Single Corporation purchased a delivery van from Couple Corporation by issuing a $2-$year, $$80,000,$ non$-$interest$-$bearing note. The full balance is due in $2$ years. Single Corporation would normally borrow at a rate of $7\%.$

Required

Complete the following with the details provided above.

Provide the journal entry to purchase the vehicle. $(6$ marks$)$

Provide the journal entry to record interest expense on December $31$ of Year $3,$ the company$$s year end. Round to the nearest dollar. $(4$ marks$)$

Question $2(10$ marks$)$

Double Corporation's balance sheet includes the following asset:

Equipment

$$95,000$

Accumulated depreciation:

$(55,000)$

After performing its annual review for impairment, Jessup obtains the following data:

Asset value in use:

$$32,000$

Fair value less selling costs:

$$36,000$

Required

Assuming Double Corporation uses the rational entity impairment model, complete the following with the details provided above.

Calculate the recoverable amount. $(3$ marks$)$

Calculate the impairment loss. $(3$ marks$)$

Prepare the entry to record the impairment loss. $(4$ marks$)$

Question $3(20$ marks$)$

On March $19$ of Year $8,$ Rawhide Corporation purchased equipment for $$400,000.$ It has an expected useful life of $10$ years and a residual value of $$40,000.$ It is expected to produce $800,000$ pairs of snowshoes over its useful life. Production in Year $8$ was $70,000$ pairs and in Year $9$ was $83,000$ pairs. Rawhide Corporation rounds depreciation to the nearest month.

Required

Provide the annual depreciation for Years $8$ and $9$ using the depreciation methods below. Be sure to show your calculations.

Straight line $(6$ marks$)$

Double declining balance $(7$ marks$)$

Units of production $(7$ marks$)$

Question $4(20$ marks$)$

Booker Corporation purchased equipment on May $31$ of Year $4$ for $$288,000.$ The expected useful life is $8$ years, and residual value is $$20,000.$ They round depreciation to the nearest month, and the straight$-$line depreciation amount is rounded to the nearest dollar.

On June $30$ of Year $8,$ they determine that the total expected useful life of the equipment will be $10$ years instead of $8$ years. Residual value will be revised to $$11,000.$

Fiscal Year$-$End for Booker Corporation is December $31.$

Required

Determine depreciation expense for the Year $8.$ Marks for this question are allocated based on your clearly labelled calculations. $(15$ marks for calculations; $5$ marks for the correct answer$)$

Question $5(20$ marks$)$

Respond to the accounting situations below. Prepare the journal entries as required.

Required

Complete the following with the details provided.

McLane Company exchanged an old mobile home and $$3,000$ cash for two used delivery trucks. The mobile home had been purchased $10$ years ago for $$70,000$ and has since been fully depreciated. While the mobile home was recently appraised at $$12,000,$ a reliable valuation for the trucks was not available. You, as the junior accountant, will need to apply the rules for exchange of assets to determine if the transaction has commercial substance. McLane Company uses IFRS. Prepare the journal entry to record the exchange. $(7$ marks$)$

Fastlane Delivery traded one of its used storage trailers, which cost $$50,000$ and accumulated depreciation of $$46,000,$ with a fair value of $$6,000$ for a much newer trailer with a list price of $$70,000.$ Fastlane Delivery also paid $$60,000$ cash. Prepare the journal entry to record the exchange using the fair value standard. Fastlane Delivery follows IFRS. $(7$ marks$)$

Assume that Fastlane Delivery was tired of the paint colour of the old trailer $($figures as above$),$ so they traded it for a similar used trailer painted red. Fastlane Delivery received $$500$ cash from the other party. Prepare the journal entry to record the exchange. $(6$ marks$)$

Question $6(20$ marks$)$

Kamloops Corporation purchased equipment on July $18$ of Year $6$ for $$500,000.$ The estimated useful life is $8$ years, and the residual value is $$50,000.$ On March $24$ of Year $12,$ they sold the equipment for $$150,000.$ Depreciation is rounded to the nearest month. The company$$s year$-$end is December $31$st$.$

Required

Provide all journal entries necessary for the sale of the equipment under the following conditions. You must also show your clearly labelled calculations.

Kamloops Corporation uses straight line depreciation. $(10$ marks$)$

Kamloops Corporation uses double declining balance depreciation. $(10$ marks$)$