LEC05B SOLUTIONS
PROBLEM 1
1-1-2018 Equipment 5,000,000
Cash 5,000,000
To record the acquisition of equipment.
12-31-2018 Depreciation Expense - Equipment 450,000
Accumulated Depreciation - Equipment 450,000
To record the annual depreciation expense.
12-31-2019 Depreciation Expense - Equipment 450,000
Accumulated Depreciation - Equipment 450,000
To record the annual depreciation expense.
12-31-2020 Depreciation Expense - Equipment 450,000
Accumulated Depreciation - Equipment 450,000
To record the annual depreciation expense.
1-1-2021 Equipment Held for Sale 1,900,000
Impairment Loss 1,750,000
Accumulated Depreciation - Equipment 1,350,000
Equipment 5,000,000
To record the reclassification of equipment from
property, plant and equipment to noncurrent asset held for
sale.
Cost 5,000,000
Accumulated Depreciation 1,350,000
Carrying Amount 3,650,000
Fair Value Less Cost to Sell 1,900,000
Impairment Loss 1,750,000
6-30-2021 Cash 1,500,000
Loss on Sale of Equipment 400,000
Equipment Held for Sale 1,900,000
To record the sale of the equipment.
PROBLEM 2
1-1-2018 Equipment 4,000,000
Cash 4,000,000
To record the acquisition of equipment.
12-31-2018 Depreciation Expense - Equipment 800,000
Accumulated Depreciation - Equipment 800,000
To record the annual depreciation expense.
12-31-2019 Depreciation Expense - Equipment 800,000
Accumulated Depreciation - Equipment 800,000
To record the annual depreciation expense.
12-31-2019 Equipment Held for Sale 2,400,000
Accumulated Depreciation - Equipment 1,600,000
Equipment 4,000,000
To record the reclassification of equipment from
property, plant and equipment to noncurrent asset held for
sale.
Cost 4,000,000
Accumulated Depreciation 1,600,000
Carrying Amount 2,400,000
Fair Value Less Cost to Sell 3,000,000
Impairment Loss -
7-1-2020 Cash 2,900,000
Equipment Held for Sale 2,400,000
Gain on Sale of Equipment 500,000
PROBLEM 3
1-1-2018 Land 2,500,000
Cash 2,500,000
To record the acquisition of land.
12-31-2018 Land 500,000
Revaluation Surplus 500,000
To record the revaluation increase (year-end
adjustment).
6-30-2019 Land 500,000
Revaluation Surplus 500,000
To record the revaluation increase (adjustment
before reclassification as noncurrent asset held for sale).
6-30-2019 Land Held for Sale 3,400,000
Impairment Loss 100,000
Land 3,500,000
To record the reclassification of equipment from
property, plant and equipment to noncurrent asset held for
sale.
Carrying Amount 3,500,000
Fair Value Less Cost to Sell 3,400,000
Impairment Loss 100,000
12-31-2019 Cash 3,350,000
Loss on Sale of Land 50,000
Land Held for Sale 3,400,000
To record the sale of the land.
12-31-2019 Revaluation Surplus 1,000,000
Retained Earnings 1,000,000
To record the transfer of revaluation surplus to
retained earnings upon disposal of the land.
PROBLEM 4
1-1-2018 Equipment 5,000,000
Cash 5,000,000
12-31-2018 Depreciation Expense - Equipment 500,000
Accumulated Depreciation - Equipment 500,000
To record the annual depreciation expense.
12-31-2019 Depreciation Expense - Equipment 500,000
Accumulated Depreciation - Equipment 500,000
To record the annual depreciation expense.
1-1-2020 Equipment Held for Sale 3,200,000
Impairment Loss 800,000
Accumulated Depreciation - Equipment 1,000,000
Equipment 5,000,000
To record the reclassification of equipment from property, plant
and equipment to noncurrent asset held for sale.
Cost 5,000,000
Accumulated Depreciation 1,000,000
Carrying Amount 4,000,000
Fair Value Less Cost to Sell 3,200,000
Impairment Loss 800,000
12-31-2020 Equipment 3,500,000
Equipment Held for Sale 3,200,000
Gain on Reclassification 300,000
To record the reclassification of equipment from noncurrent
asset held for sale back to property, plant and equipment.
Carrying Amount, 01/01/2020 (if not classified as NCAHFS) 4,000,000
Depreciation expense that would have been recognized in 2020 500,000
Carrying Amount, 12/31/2020 (if not classified as NCAHFS) 3,500,000
Recoverable Amount 3,600,000
Measurement of Equipment (lower between CA and RA-FVCTS) 3,500,000
Carrying Amount of NCAHFS 3,200,000
Gain on Reclassification 300,000
12-31-2021 Depreciation Expense - Equipment 500,000
Accumulated Depreciation - Equipment 500,000
To record the annual depreciation expense.