Exam 10: Applications of Fair Value to Non-Current Assets

Wallace Inc wishes to use the revaluation model for this property: The fair value for the property is $60,000.What amount would be booked to the "accumulated depreciation" account if Wallace chooses to use the elimination method to record the revaluation?

Company Ten purchased land for $400,000 during the year.Fair value at the end of the year was $500,000. Prepare the journal entry to record the revaluation adjustment.

Compare the proportional method and the elimination method for recording the revaluation entry.Contrast the benefits and drawbacks of each method.

Explain when a non-current asset is impaired.

Which of the following is correct with respect to when the impairment test must be performed?

Which is correct with respect to the accounting treatment under the cost or revaluation model?

Wright Now Limited (WNL)was incorporated on January 1,2017 when the sole shareholder invested $7,500,000.This is the only financing the firm needed.WNL used $1,200,000 of the funds to purchase land.The company has a single project that it developed over four years.Below are details of the four years of operations.At the end of 2020 the land was sold for its fair value. Required: Complete the following table,assuming that WNL uses the revaluation model of measurement.OCI refers to other comprehensive income.

Grover Inc wishes to use the revaluation model for this property: The fair value for the property is $100,000.Assuming this is the first year of using the revaluation model,what amount would be booked to the "other comprehensive income" account if Grover chooses to use the proportional method to record the revaluation?

Which of the following is correct with respect to when the impairment test must be performed?

When is a "disposal group" classified as held for sale?

Adam's Bikes produces specialized bicycle frames.The production process uses two machines,which together form a cash generating unit (CGU).The following information is relevant to the evaluation of impairment for these machines. Required: a.Assume that the welding machine has a fair value less costs to sell of $420,000.Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines. b.Assume that the welding machine has a fair value less costs to sell of $455,000.Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines.

Wallace Inc wishes to use the revaluation model for this property: The fair value for the property is $60,000.What amount would be booked to the "accumulated depreciation" account if Wallace chooses to use the proportional method to record the revaluation?

Explain how an impairment loss is recorded for non-current assets.

Smith Inc wishes to use the revaluation model for this property: The fair value for the property is $150,000.Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years,how much depreciation expense would be recorded in the year subsequent to the revaluation?

Grover Inc wishes to use the revaluation model for this property: The fair value for the property is $100,000.What amount would be booked to the "accumulated depreciation" account if Grover chooses to use the proportional method to record the revaluation?

Wallace Inc wishes to use the revaluation model for this property: The fair value for the property is $60,000.Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years,how much depreciation expense would be recorded in the year subsequent to the revaluation?

Which of the following is correct with respect to the "fair value model"?

Based on the following information,what is the recoverable amount for the impairment test?

Based on the following information,what is the recoverable amount?

Smith Inc wishes to use the revaluation model for this property: The fair value for the property is $150,000.What amount would be booked to the "accumulated depreciation" account if Smith chooses to use the proportional method to record the revaluation?