On 30 June 2017 You Can Cook P
On 30 June 2017 You Can Cook Pty Ltd purchased equipment at acost of $625,000 (GST exclusive) with an estimated useful life of10 years and no residual value. On 30 June 2020, the equipment hada carrying amount of $437 500.
On 30 June 2020 the same item of equipment was determined ashaving a recoverable amount of $350 000 and a remaining useful lifeof 7 years.
On 30 June 2023, the equipment was assessed as having arecoverable amount of $260 000 and a remaining useful life of 3years.
All equipment is carried under thecost model.
Prepare the general journal entries torecord the impairment of equipment and depreciation
under the cost model on 30 June 2020, 30 June 2023 and 30 June2024.
Please note the depreciation expense for the equipmenthas not been recorded for the year 2020 (ended 30June 2020).
Narrations are not required
|
General Journal |
|||
|
Date |
Account |
Debit |
Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Answer:
Ans:
Working note: on 30th june 2020, carrying amount of equipment= $625000- 625000/10*3 =$ 437500
Recoverable amount on 30th june 2020 is $350000
Impairment on 30th june is 437500- $ 350000 =$ 87500
Depreciation for 30 june 2020 is 625000/10 = $ 62500
On 30th june 2023 ,Carrying amount is $ 625000- $ 625000/10*6 =$ 250000
Recoverable amount on 30th june 2023 is $ 260000, No impairmenton 30 june 2023
Depreciation for year ended on 30 june 2024 is $250000/3 =$83333 Approx
Journal enteries for impairment and Depreciation as below:
Date Account DEBIT CREDIT
30th june Impairment loss aic Dr. $87500
To equipment a/c Cr $ 87500
Depreciation a/c Dr $ 62500
To equipment a/c Cr $ 62500
30 june 2023 Depreciation a/c Dr $ 62500
To equipment a/c Cr. $62500
30 june 2024 Depreciation a/c Dr $ 83333
To equipment a/c Cr. $ 83333*
"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"
