60.1K

Verified Solution

Link Copied!

MEDLink System Inc. $(MEDLink)is$ a privately held company specializing $in$ customized medical software $to$ manage patient records for the medical offices, medical laboratories and hospitals across Canada. MEDLink users are healthcare administrators and professionals $(lab$ technicians, nurses and doctors$)$ across Canada.

The company has been operating from its headquarters $in$ the Lower

Mainland $ofBC$ since Jan $1,2018.$ The company$s$ fiscal year end $is$

December $31.$ For the first time since its inception, $an$ external auditor had been appointed $to$ conduct $an$ audit prior $to$ issuing the financial statements planned for April $15,2022.$

Server Farm $(servers$ and network assets$)$

When the servers and network assets were initially purchased $in2018,$ the company had $to$ arrange for long distance transportation from Toronto, costing $$16,000.$ Insurance while $in$ transit was $$34,000.$ The company also had $to$ pay technical engineers $to$ install and setup the equipment, costing $$35,000.$ Start$-up$ and testing costs were another $$15,000.$ Total expenditure $$100,000$ was fully expensed $in2018.$

For the year ended Dec $31,2021$ Meg gathered the following information $on$ the server farm assets. Despite evidence from internal reporting shows performance below expectations, $no$ impairment was recognized.

$($Picture is information$)$

Required:

Regarding server farm, provide correct calculations and journal entries for each transaction in compliance with IFRS. Include

your assumptions in the calculations$/$journal entries.

Answer & Explanation Solved by verified expert

See Answer