Based on the following information, what is the net book value of the asset on the December 31, 2021 balance sheet? \[\begin{array} { | l | r | } \hline \text { Cost } & \$ 750,000 \\ \hline \text { Accumulated depreciation } & 400,000 \\ \hline \text { Value in use (sum of discounted cash flows) } & 300,000 \\ \hline \text { Fair value } & 200,000 \\ \hline \text { Disposal costs } & 15,000 \\ \hline \end{array}\]

A) $185,000 B) $200,000 C) $300,000 D) $350,000 A) $185,000 B) $200,000 C) $300,000 D) $350,000

Reid Resch is a maker of instruments for measuring weight, temperature, pressure, and so on. Due to the increasing use of digital instruments, one of the company production lines based on analogue technology is potentially impaired. Management has produced the following information relating to this production line, which is considered to be a cash generating unit: \[\begin{array} { | l | r | } \hline \text { Original cost } & \$ 4,940,000 \\ \hline \text { Accumulated depreciation } & 1,800,000 \\ \hline \text { Fair value } & 3,270,000 \\ \hline \text { Costs to sell } & 48,000 \\ \hline \text { Risk adjusted cost of capital } & 5 \% \\ \hline & \\ \hline \text { Incremental cash flows for } & \$ 200,000 \\ \hline 2020 & 1,200,000 \\ \hline 2021 & 1,200,000 \\ \hline 2022 & 1,000,000 \\ \hline 2023 & 0 \\ \hline 2024 \text { and thereafter } & 5 \\ \hline \end{array}\] Required: Determine whether the production line is impaired, and if so, the amount of the impairment.

\[\begin{array} { | l | r | c | r | } \

Grover Inc wishes to use the revaluation model for this property: \[\begin{array} { | l | r | } \hline & \text { Before Revaluation } \\ \hline \text { Building Gross Value } & 160,000 \\ \hline \text { Building Accumulated Depreciation } & 40,000 \\ \hline \text { Net carrying value } & 120,000 \\ \hline \end{array}\] The fair value for the property is $140,000. Assuming this is the first year of using the revaluation model, what amount would be booked to profit and loss if Grover chooses to use the elimination method to record the revaluation?

A) $0 B) $20,000 credit. C) $20,000 debit. D) $30,000 credit. A) $0 B) $20,000 credit. C) $20,000 debit. D) $30,000 credit.

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, 2019, the controller gathered the following information relating to the assembly line equipment, which is considered to be a cash generating unit: \[\begin{array} {| l | r | } \hline \text { Original cost } & \$ 6,379,000 \\ \hline \text { Accumulated depreciation } & 2,400,000 \\ \hline \text { Fair value } & 3,247,000 \\ \hline \text { Costs to sell } & 145,000 \\ \hline \text { Risk adjusted cost of capital } & 6 \% \\ \hline & \\ \hline \text { Incremental cash flows for } & \\ \hline 2020 & \$ 1,100,000\\ \hline 2021 & 1,000,000 \\ \hline 2022 & 800,000 \\ \hline 2023 & 900,000 \\ \hline 2024 \text { and thereafter } & 0 \\ \hline \end{array}\] Required: Determine whether the assembly line is impaired, and if so, the amount of the impairment.

\[\begin{array} { | l | r | c | r | } \

Based on the following information, what is the net amount that this equipment should be reported at in the balance sheet at December 31, 2021? \[\begin{array} { | l | r | } \hline \text { Cost } & \$ 500,000 \\ \hline \text { Accumulated depreciation } & 230,000 \\ \hline \text { Value in use (sum of discounted cash flows) } & 250,000 \\ \hline \text { Fair value } & 240,000 \\ \hline \text { Disposal costs } & 10,00 \\ \hline \end{array}\]

A) $230,000 B) $240,000 C) $250,000 D) $270,000 A) $230,000 B) $240,000 C) $250,000 D) $270,000

The following information is available about George Inc's discontinued operations: \[\begin{array} { | l | r | } \hline \text { Profit attributable to discontinued operations (before taxes) } & \$ 1,500,000 \\ \hline \text { Net gain on disposal } & 200,000 \\ \hline \text { Income taxes attributable to discontinued operations } & 100,000 \\ \hline \end{array}\] What single amount will be presented on George's statement of comprehensive income?

A) $1,400,000 B) $1,500,000 C) $1,600,000 D) $1,700,000 A) $1,400,000 B) $1,500,000 C) $1,600,000 D) $1,700,000

What impairment, if any, exists on this product line? \[\begin{array} { | l | r | } \hline & \text { Product CDC } \\ \hline \text { Original cost } & \$ 5,200,000 \\ \hline \text { Accumulated depreciation } & 2,100,000 \\ \hline \text { Fair value } & 4,500,000 \\ \hline \text { oosts to sell } & 500,000 \\ \hline \text { Value in use } & 4,300,000 \\ \hline \end{array}\]

A) $0 B) $900,000 C) $1,200,000 D) $4,000,000 A) $0 B) $900,000 C) $1,200,000 D) $4,000,000

Wilson Inc wishes to use the revaluation model for this property: \[\begin{array} { | l | r | } \hline & \text { Before Revaluation } \\ \hline \text { Building Gross Value } & 120,000 \\ \hline \text { Building Accumulated Depreciation } & 40,000 \\ \hline \text { Net carrying value } & 80,000 \\ \hline \end{array}\] The fair value for the property is $140,000. Assuming this is the first year of using the revaluation model, which of the following amounts will be booked?

A) $60,000 debit to profit and loss. B) $60,000 credit to profit and loss. C) $60,000 debit to OCI. D) $60,000 credit to OCI. A) $60,000 debit to profit and loss. B) $60,000 credit to profit and loss. C) $60,000 debit to OCI. D) $60,000 credit to OCI.

Smith Inc wishes to use the revaluation model for this property: \[\begin{array} { | l | r | } \hline & \text { Before Revaluation } \\ \hline \text { Building Gross Value } & 120,000 \\ \hline \text { Building Accumulated Depreciation } & 40,000 \\ \hline \text { Net carrying value } & 80,000 \\ \hline \end{array}\] The fair value for the property is $150,000. Assuming this is the first year of using the revaluation model, what amount would be booked to the "other comprehensive income" account if Smith chooses to use the proportional method to record the revaluation?

A) $35,000 debit. B) $35,000 credit. C) $70,000 debit. D) $70,000 credit. A) $35,000 debit. B) $35,000 credit. C) $70,000 debit. D) $70,000 credit.

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

Company One purchased land for $900,000 some years ago. Fair value was $450,000 at the beginning of this year and $340,000 at the end of this year. Prepare the journal entry to record this year's revaluation adjustment.

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Question 21

Based on the following information, what is the net book value of the asset on the December 31, 2021 balance sheet? Cost \ 750,000 Accumulated depreciation 400,000 Value in use (sum of discounted cash flows) 300,000 Fair value 200,000 Disposal costs 15,000

(Multiple Choice)

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Question 22

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

(Essay)

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Question 23

Which is not a source of information that would be used as an indicator of impairment?

(Multiple Choice)

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Question 24

Reid Resch is a maker of instruments for measuring weight, temperature, pressure, and so on. Due to the increasing use of digital instruments, one of the company production lines based on analogue technology is potentially impaired. Management has produced the following information relating to this production line, which is considered to be a cash generating unit: Original cost \ 4,940,000 Accumulated depreciation 1,800,000 Fair value 3,270,000 Costs to sell 48,000 Risk adjusted cost of capital 5\% Incremental cash flows for \ 200,000 2020 1,200,000 2021 1,200,000 2022 1,000,000 2023 0 2024 and thereafter 5 Required: Determine whether the production line is impaired, and if so, the amount of the impairment.

(Essay)

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Question 25

Grover Inc wishes to use the revaluation model for this property: Before Revaluation Building Gross Value 160,000 Building Accumulated Depreciation 40,000 Net carrying value 120,000 The fair value for the property is $140,000. Assuming this is the first year of using the revaluation model, what amount would be booked to profit and loss if Grover chooses to use the elimination method to record the revaluation?

(Multiple Choice)

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Question 26

What is a "disposal group"?

(Multiple Choice)

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Question 27

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, 2019, the controller gathered the following information relating to the assembly line equipment, which is considered to be a cash generating unit: Original cost \ 6,379,000 Accumulated depreciation 2,400,000 Fair value 3,247,000 Costs to sell 145,000 Risk adjusted cost of capital 6\% Incremental cash flows for 2020 \ 1,100,000 2021 1,000,000 2022 800,000 2023 900,000 2024 and thereafter 0 Required: Determine whether the assembly line is impaired, and if so, the amount of the impairment.

(Essay)

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Question 28

Based on the following information, what is the net amount that this equipment should be reported at in the balance sheet at December 31, 2021? Cost \ 500,000 Accumulated depreciation 230,000 Value in use (sum of discounted cash flows) 250,000 Fair value 240,000 Disposal costs 10,00

(Multiple Choice)

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Question 29

Explain why non-current assets held for sale are valued at fair value less costs to sell rather than at their value in use.

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Question 30

Which statement is not correct?

(Multiple Choice)

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Question 31

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

(Multiple Choice)

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Question 32

What is the "recoverable amount"?

(Multiple Choice)

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Question 33

How is income and expense recognized for biological assets under IFRS?

(Multiple Choice)

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Question 34

The following information is available about George Inc's discontinued operations: Profit attributable to discontinued operations (before taxes) \ 1,500,000 Net gain on disposal 200,000 Income taxes attributable to discontinued operations 100,000 What single amount will be presented on George's statement of comprehensive income?

(Multiple Choice)

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Question 35

How should a revaluation entry generally not be booked?

(Multiple Choice)

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Question 36

What impairment, if any, exists on this product line? Product CDC Original cost \ 5,200,000 Accumulated depreciation 2,100,000 Fair value 4,500,000 oosts to sell 500,000 Value in use 4,300,000

(Multiple Choice)

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Question 37

Wilson Inc wishes to use the revaluation model for this property: Before Revaluation Building Gross Value 120,000 Building Accumulated Depreciation 40,000 Net carrying value 80,000 The fair value for the property is $140,000. Assuming this is the first year of using the revaluation model, which of the following amounts will be booked?

(Multiple Choice)

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Question 38

Which statement describes the "historical cost model"?

(Multiple Choice)

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Question 39

Smith Inc wishes to use the revaluation model for this property: Before Revaluation Building Gross Value 120,000 Building Accumulated Depreciation 40,000 Net carrying value 80,000 The fair value for the property is $150,000. Assuming this is the first year of using the revaluation model, what amount would be booked to the "other comprehensive income" account if Smith chooses to use the proportional method to record the revaluation?

(Multiple Choice)

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Question 40

Company One purchased land for $900,000 some years ago. Fair value was $450,000 at the beginning of this year and $340,000 at the end of this year. Prepare the journal entry to record this year's revaluation adjustment.

Based on the following information, what is the net book value of the asset on the December 31, 2021 balance sheet? Cost \ 750,000 Accumulated depreciation 400,000 Value in use (sum of discounted cash flows) 300,000 Fair value 200,000 Disposal costs 15,000

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

Which is not a source of information that would be used as an indicator of impairment?

What is a "disposal group"?

Based on the following information, what is the net amount that this equipment should be reported at in the balance sheet at December 31, 2021? Cost \ 500,000 Accumulated depreciation 230,000 Value in use (sum of discounted cash flows) 250,000 Fair value 240,000 Disposal costs 10,00

Explain why non-current assets held for sale are valued at fair value less costs to sell rather than at their value in use.

Which statement is not correct?

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

What is the "recoverable amount"?

How is income and expense recognized for biological assets under IFRS?

How should a revaluation entry generally not be booked?

What impairment, if any, exists on this product line? Product CDC Original cost \ 5,200,000 Accumulated depreciation 2,100,000 Fair value 4,500,000 oosts to sell 500,000 Value in use 4,300,000

Which statement describes the "historical cost model"?

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