Snowish Boutique Corp. (SBC) reports its financial results in accordance with IFRS and has a December 31 year end. As at December 31, 20X3, it had a number of tangible and intangible assets as detailed below: Snowish Boutique Corp. Property, plant, and equipment and intangible assets December 31, 20X3 Life (in years) Cost Residual value Accumulated depreciation / impairment to December 31, 20X3 Net book value, at December 31, 20X3 Tools and other equipment 15 $ 38,850 $ 0 $24,605 $14,245 Vehicles — old 5 16,500 500 14,400 2,100 Computer equipment 3 10,500 600 8,167 2,333 Patent 15 75,000* 0 *40,278 34,722 Trademark NA 45,000 0 0 45,000 $185,850 $1,100 $87,450 $98,400 *Reported at its net amount of $34,722 on the statement of financial position Other information follows: 1. SBC uses the straight-line method to depreciate all depreciable assets other than computer equipment. The company takes a half-year of depreciation in the year of acquisition and a half-year of depreciation in the year of disposal. SBS uses a double-declining balance method to depreciate its computer equipment. 2. As SBC does not prepare interim statements, it only prepares adjusting entries at its year end. 3. Impairment losses are credited to an accumulated depreciation account for tangible assets and directly to the asset for intangible assets. 4. SBC’s trademark and patent are each considered to be a cash-generating unit as SBC leases (rents out) both these assets to an outside entity for a royalty fee. 5. SBC paid $75,000 to acquire a patent in 20X1. In 20X3 SBC wrote down the value of its patent $30,000 as it its value was judged to be impaired due to a competitor’s copying of the design. During 20X4, SBC spent $13,000 successfully defending its patent. In light of the successful patent defence, SBC now estimates that both the fair value of the patent and its value in use are $69,000. Estimated costs of disposal are $2,000. Intermediate Financial Reporting 1 Project 2 4 / 8 6. SBC tested its trademark for impairment at its December 31, 20X4, year end. Its fair value and value in use were estimated to be $39,000 and $41,000, respectively. Estimated costs of disposal are $4,000. 7. During 20X4 the company bought and sold the following property, plant, and equipment: a) On March 15, 20X4, SBC paid $201,500 cash to purchase land to be used for future expansion, including $1,500 in legal fees directly attributable to the purchase. SBC elected to subsequently value the land using the revaluation model. The fair market value of the land on December 31, 20X4, was $208,000. b) October 1, 20X4, SBC purchased a new vehicle at a cost of $16,500 plus nonrefundable taxes of $2,000. The expected useful life of the vehicle is five years, at which time the residual value is estimated to be $4,000. c) On November 15, 20X4 the company sold its old delivery vehicle for $800 cash. Required: Prepare journal entries to record the transactions detailed above including all adjusting entries required at December 31, 20X4. Prepare a separate entry for the depreciation of each asset and for other events that must be recorded.

Answer rating: 100% (QA)

SOLUTION Journal entries are illustrated in the explanation part Explanation Pass the journal entry to record the purchase of land using the following table as follows Dates Description Post ref Debit ... View the full answer