The following information below relates to equipment owned by Yoho Ltd at December 31, 2019:...
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Accounting
The following information below relates to equipment owned by Yoho Ltd at
December 31, 2019:
Cost$10,000,000
Accumulated depreciation to date4,000,000
Expected future net cash flows (undiscounted)7,800,000
Expected future net cash flows
(discounted, value in use)5,700,000
Fair value6,100,000
Cost to sell (costs of disposal)200,000
As at December 31, 2019 the equipment has a remaining useful life of four years.The company uses the straight-line method of depreciation.
REQUIRED:
Assume Yoho Ltd is a publicly traded company in Canada and uses IFRS
a)Prepare the journal entry, at December 31, 2019, to record asset impairment, if any. (SHOW ALL CALCULATIONS CLEARLY).
(5 marks)
b)Prepare the journal entry to record depreciation expense for 2020. (SHOW ALL CALCULATIONS CLEARLY).(3 marks)
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