Based on the following information, what is the impairment amount to be recorded? \[\begin{array} { | l | r | } \hline \text { Cost } & \$ 750,000 \\ \hline \text { Accumulated depreciation } & 530,000 \\ \hline \text { Value in use (sum of discounted cash flows) } & 230,000 \\ \hline \text { Fair value } & 240,000 \\ \hline \text { Disposal costs } & 5,000 \\ \hline \end{array}\]

A) $0 B) $10,000 C) $15,000 D) $20,000 A) $0 B) $10,000 C) $15,000 D) $20,000

Wallace Inc wishes to use the revaluation model for this property: \[\begin{array} { | l | r | } \hline & \text { Before Revaluation } \\ \hline \text { Building Gross Value } & 120,000 \\ \hline \text { Building Other comprehensive income } & 40,000 \\ \hline \text { Net carrying value } & 80,000 \\ \hline \end{array}\] The fair value for the property is $60,000. Assuming this is the first year of using the revaluation model, what amount would be booked to the "other comprehensive income" account if Wallace chooses to use the proportional method to record the revaluation?

A) $0 B) $10,000 debit. C) $10,000 credit. D) $20,000 debit. A) $0 B) $10,000 debit. C) $10,000 credit. D) $20,000 debit.

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. 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?

A) $16,000 debit. B) $16,000 credit. C) $28,000 credit. D) $28,000 debit. A) $16,000 debit. B) $16,000 credit. C) $28,000 credit. D) $28,000 debit.

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

A) $150,000 B) $185,000 C) $300,000 D) $450,000 A) $150,000 B) $185,000 C) $300,000 D) $450,000

Based on the following information, what is the recoverable amount for the impairment test? \[\begin{array} { | l | r | } \hline \text { Cost } & \$ 750,000 \\ \hline \text { Accumulated depreciation } & 530,000 \\ \hline \text { Value in use (sum of discounted cash flows) } & 230,000 \\ \hline \text { Fair value } & 240,000 \\ \hline \text { Disposal costs } & 5,000 \\ \hline \end{array}\]

A) $220,000 B) $230,000 C) $235,000 D) $240,000 A) $220,000 B) $230,000 C) $235,000 D) $240,000

Wallace 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 $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?

A) $12,000 debit. B) $12,000 credit. C) $16,000 credit. D) $16,000 debit. A) $12,000 debit. B) $12,000 credit. C) $16,000 credit. D) $16,000 debit.

Explain the meaning of biological assets and agricultural produce. Classify each of the following items as: biological asset, agricultural produce, or neither. \[\begin{array} { | c | l | c | c | c | } \hline& { \text { Item } } & \text { Biological asset } & \begin{array} { c } \text { Agricultural } \\ \text { produce } \end{array} & \text { Neither } \\ \hline\text { i. } & \text {Blueberries } & & & \\ \hline \text { ii. } & \text { Blueberry jam } & & & \\ \hline \text { iii. } &\text { Trees in a virgin (unmanaged)forest } & & & \\ \hline \text { iv. } &\text { Christmas trees on a tree farm } & & & \\ \hline\text { v. } &\text { Peach trees } & & & \\ \hline \end{array}\]

Biological assets are living plants and

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

Based on the following information, what is the impairment amount to be recorded? Cost \ 750,000 Accumulated depreciation 530,000 Value in use (sum of discounted cash flows) 230,000 Fair value 240,000 Disposal costs 5,000

(Multiple Choice)

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Question 41

How is a revaluation loss on non-current assets accounted for?

(Multiple Choice)

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Question 42

Explain how non-current assets that are part of a discontinued operation should be accounted for.

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Question 43

Wright Now Limited (WNL)was incorporated on January 1, 2020 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. WNL developed a single project from 2020-2023. Pertinent financial details of this project are set out below. At the end of 2023 the land was sold for its fair value. in thousands) 2020 2021 2022 2023 Revenue - all cash \ 3,100 \ 3,500 \ 2,600 \ 2,400 Expenses - all cash 2,900 2,900 2,200 2,300 Fair value of land, end of year 1,550 1,150 1,400 1,500 Required: Complete the following table, assuming that WNL uses the historical cost basis of measurement Historical cost basis ( \0 00's) Revenue \ 3,100 \ 3,500 \ 2,600 \ 2,400 Expenses 2,900 2,900 2,200 2,300 Gain on disposal of land Net income (= comprehensive income) Opening retained earnings Closing retained earnings Cash \6 ,500 Land Total assets Share capital \ 7,500 Retained earnings Total shareholder's equity

(Essay)

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Question 44

Wallace Inc wishes to use the revaluation model for this property: Before Revaluation Building Gross Value 120,000 Building Other comprehensive income 40,000 Net carrying value 80,000 The fair value for the property is $60,000. Assuming this is the first year of using the revaluation model, what amount would be booked to the "other comprehensive income" account if Wallace chooses to use the proportional method to record the revaluation?

(Multiple Choice)

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Question 45

What are "costs of disposal"?

(Multiple Choice)

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Question 46

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. 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?

(Multiple Choice)

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Question 47

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

(Multiple Choice)

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Question 48

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

(Multiple Choice)

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Question 49

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

(Multiple Choice)

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Question 50

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.

(Essay)

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Question 51

Information about the PPE for Jeremy Inc. is provided below. The company held the land and building to earn rental income and appropriately applied the fair value model for the land and building. Assume that the company takes a full of depreciation each year under the straight line method. The company decided to use the building as its new head office at the beginning of year 3. Prepare the journal entries required to record the change in use for Year 3. Purchase Price Fair value at the end of Year 1 Fair value at the end of Year 2 Fair value at the end of Year 3 Land 10 million 12 million 14 million 13 million Building -20 year useful life 40 million 45 million 40 million 45 million Machinery -5 year useful life 4.8 million 3.5 million 2.7 million .

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Question 52

Which statement is correct?

(Multiple Choice)

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Question 53

Based on the following information, what is the impairment booked at December 31, 2021? Cost \ 750,000 Accumulated depreciation 300,000 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 54

Based on the following information, what is the recoverable amount for the impairment test? Cost \ 750,000 Accumulated depreciation 530,000 Value in use (sum of discounted cash flows) 230,000 Fair value 240,000 Disposal costs 5,000

(Multiple Choice)

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Question 55

Which statement describes the "revaluation model"?

(Multiple Choice)

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Question 56

Wallace 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 $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?

(Multiple Choice)

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Question 57

Which statement is correct about using the "fair value less point of sale costs" approach for biological assets?

(Multiple Choice)

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Question 58

Explain the meaning of biological assets and agricultural produce. Classify each of the following items as: biological asset, agricultural produce, or neither. Item Biological asset Agricultural produce Neither i. Blueberries ii. Blueberry jam iii. Trees in a virgin (unmanaged)forest iv. Christmas trees on a tree farm v. Peach trees

(Essay)

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Question 59

Company Nine purchased land for $600,000 some years ago. Fair value was $800,000 at the beginning of this year and $350,000 at the end of this year. Prepare the journal entry to record this year's revaluation adjustment.

(Essay)

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Question 60

Based on the following information, what is the impairment amount to be recorded? Cost \ 750,000 Accumulated depreciation 530,000 Value in use (sum of discounted cash flows) 230,000 Fair value 240,000 Disposal costs 5,000

How is a revaluation loss on non-current assets accounted for?

Explain how non-current assets that are part of a discontinued operation should be accounted for.

What are "costs of disposal"?

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

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

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

Which statement is correct?

Based on the following information, what is the impairment booked at December 31, 2021? Cost \ 750,000 Accumulated depreciation 300,000 Value in use (sum of discounted cash flows) 300,000 Fair value 200,000 Disposal costs 15,000

Based on the following information, what is the recoverable amount for the impairment test? Cost \ 750,000 Accumulated depreciation 530,000 Value in use (sum of discounted cash flows) 230,000 Fair value 240,000 Disposal costs 5,000

Which statement describes the "revaluation model"?

Which statement is correct about using the "fair value less point of sale costs" approach for biological assets?

Company Nine purchased land for $600,000 some years ago. Fair value was $800,000 at the beginning of this year and $350,000 at the end of this year. Prepare the journal entry to record this year's revaluation adjustment.

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