Discussion Questions– Property, Plant & Equipment Subsequent Measurement
Please answer the following questions taken from Intermediate Accounting IFRS Edition (4th Edition) (Kieso,
Weygandt and Warfield ,2020)
Chapter 10
E 10.24
Take note, no residual value, Full year on year of acquisition and none in year of disposal
Disposal of building: Need to calculate Gain or Loss : FV-BV
30/1
Accumulated Depreciation—Buildings .....................................
95,200*
Loss on Disposal of Machinery ................................................
21,900**
Buildings .......................................................................
112,000
Cash .............................................................................
5,100
*(5% X $112,000 = $5,600; $5,600 X 17 = $95,200)
**($112,000 – $95,200) + $5,100
Sale of machine: Need to calculate Gain or loss
FOB purchaser’s plant means seller is obligated to pay freight cost
10/3
Cash ($2,900 – $300) ..............................................................
2,600
Accumulated Depreciation—Machinery ...................................
11,200*
Loss on Disposal of Machinery ................................................
2,200**
Machinery .....................................................................
16,000
*(10% X $16,000 = $1,600; 7 X $1,600 = $11,200)
**($16,000 – $11,200) + $300 – $2,900
20/3
Maintenance and Repairs Expense .........................................
Cash .............................................................................
3,000
3,000
1
Remove cost of old base and include cost of new base
18/5
Machinery .................................................................................
5,500
Accumulated Depreciation—Machinery ...................................
2,400*
Loss on Disposal of Machinery ................................................
1,600**
Machinery .....................................................................
4,000
Cash .............................................................................
5,500
*(10% X $4,000 = $400; 6 X $400 = $2,400)
**($4,000 – $2,400)
6/23
Maintenance and Repairs Expense .........................................
6,900
Cash .............................................................................
6,900
Chapter 11
EXERCISE 11.12
(a)
1996–2005—(€1,900,000 – €60,000) ÷ 40 = €46,000/yr.
(b)
2006–2023—Building (€1,900,000 – €60,000) ÷ 40 =
Addition (€470,000 – €20,000) ÷ 30 =
€46,000/yr.
€15,000/yr.
€61,000/yr.
(c)
No adjusting entry required.
(d)
Revised annual depreciation
Building
Book value: (€1,900,000 – €1,288,000*) ....................................
€612,000
Residual value .............................................................................
(60,000)
552,000
Remaining useful life....................................................................
÷ 32 years
Annual depreciation .....................................................................
€ 17,250
*€46,000 X *28 years = €1,288,000
Addition
Book value: (€470,000 – €270,000**) .........................................
€200,000
Residual value .............................................................................
(20,000)
2
180,000
Remaining useful life....................................................................
÷ 32 years
Annual depreciation .....................................................................
€
5,625
**€15,000 X 18 years = €270,000
Annual depreciation expense—building (€17,250 + €5,625)
€22,875
EXERCISE 11.25
Value at
Other Comprehensive
Accumulated Other
Income
Comprehensive Income
December 31
2020
2021
2022
Recognized in Net
Income
¥50,000
¥50,000
(50,000)
—
—
—
(¥40,000)
—
25,000
2023
10,000
10,000
2024
50,000
60,000
15,000
—
EXERCISE 11.26
December 31, 2020
Land (¥450,000 – ¥400,000) ..............................................................
50,000
Unrealized Gain on Revaluation—Land ...................................
50,000
December 31, 2021
Unrealized Gain on Revaluation—Land .............................................
50,000
Loss on Impairment (¥400,000 – ¥360,000).......................................
40,000
Land (¥450,000 – ¥360,000) ....................................................
90,000
December 31, 2022
Land (¥385,000 – ¥360,000) ..............................................................
25,000
Recovery of Impairment Loss ..................................................
25,000
December 31, 2023
Land (¥410,000 – ¥385,000) ..............................................................
25,000
Recovery of Impairment Loss
(¥40,000 – ¥25,000) ..............................................................
15,000
Unrealized Gain on Revaluation—Land ...................................
10,000
December 31, 2024
Land (¥460,000 – ¥410,000) ..............................................................
Unrealized Gain on Revaluation—Land ...................................
50,000
50,000
3