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

Wilson Inc wishes to use the revaluation model for this property: The fair value for the property is $140,000. What amount would be booked to the "accumulated depreciation" account if Wilson chooses to use the elimination method to record the revaluation?

Explain the accounting under the revaluation model available under IFRS.

Which of the following is correct with respect to the "recoverable amount"?

What is the "recoverable amount"?

Due to increased competition from low-cost foreign manufacturers, Genevive's Toy Company is experiencing significant declines in sales. The company produces its toys from an assembly line. The equipment in this assembly line has not been previously revalued or impaired. For the year ending December 31, 2010, the controller gathered the following information relating to the assembly line equipment, which is considered to be a cash generating unit: Required: Determine whether the assembly line is impaired, and if so, the amount of the impairment.

Which of the following is correct with respect to the "impairment loss under the revaluation model"?

Speakspere Partners is scaling back operations; the partnership has the following assets on its books that it is considering for sale: a. Speakspere has a parcel of land, valued at $1 million, that is currently vacant. The land is located in an area of the city that was undeveloped and Speakspere had purchased it a number of years ago in anticipation of growth. Actual growth has been slower than expected and has in fact been declining since last year. Speakspere is unsure whether a willing buyer can be found under these conditions. b. Speakspere's operations are located in an office building and a separate storage facility. Speakspere owns the land on which these facilities reside. The partnership is able to vacate the storage facility on short notice and there is an active market for similar storage. As for the office, Speakspere plans to continue its operations, and does not foresee vacating the office space in the immediate future. Required: Determine whether Speakspere should present the assets described above as non-current assets held for sale. Be sure to provide any supporting explanation for your conclusions.

Which of the following is correct with respect to the "impairment loss"?

Based on the following information, what is the impairment amount to be recorded?

What impairment, if any, exists on these product lines?

When does an entity use the "cost less any depreciation" approach for biological assets?

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 elimination method to record the revaluation?

Wright Now Limited (WNL)was incorporated on January 1, 2011 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 2014 the land was sold for its fair value. Required: Complete the following table, assuming that WNL uses the historical cost basis of measurement.

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

Based on the following information, what is the net amount that this equipment should be reported at on FlexiHose's balance sheet at December 31, 2012?

When does agricultural activity end?

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.

Explain why non-current assets held for sale are recorded at the lower of carrying value and fair value less costs to sell.

When does agricultural activity end?

Sigma Company has a piece of equipment with an original cost of $1,440,000. The equipment's carrying value at the beginning of this year (net of accumulated depreciation)was $1,080,000. Sigma recorded $120,000 for depreciation for this year. The equipment's fair value at the end of the year was $1,056,000. This is the first year that the company has revalued this equipment. Required: a. Record the journal entry for the revaluation adjustment assuming that Sigma uses the elimination method. b. Record the journal entry for the revaluation adjustment assuming that Sigma uses the proportional method.