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Prepare the journal entry to record depreciation expense

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Reference no: EM132483718

The information that follows relates to equipment owned by Waterway Limited at December 31, 2017:

Cost                                                  $8,280,000

Accumulated depreciation to date              920,000

Expected future net cash flows (undiscounted) 6,440,000

Expected future net cash flows (discounted, value in use) 5,842,000

Fair value                                            5,704,000

Costs to sell (costs of disposal)              46,000

Assume that Waterway will continue to use this asset in the future. As at December 31,2017, the equipment has a remaining useful life of four years. Waterway uses the straight-line method of depreciation.

Required: (round all answers to 0 decimal place)

a) Assume that Waterway is a private company that follows ASPE.

Question 1. Prepare the journal entry at December 31, 2017, to record asset impairment, if any and state the model you used to calculate the impairment if any

Question 2. Prepare the journal entry to record depreciation expense for 2018.

Question 3. The equipment's fair value at December 31, 2018, is $5.98 million. Prepare the journal entry, if any, to record the increase in fair value.

b) Repeat the requirements in (a) above assuming that Waterway is a public company that follows IFRS.

Reference no: EM132483718

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