Ayayai Corp., a mining company, owns a significant mineral deposit in a northern territory. Ayayai prepares financial statements in accordance with IFRS. Included in the asset is a road system that was constructed to give company personnel access to the mineral deposit for maintenance and mining activity. The road system cannot be sold separately and separate cash flow information is not available for it. The carrying amounts of two cash-generating units of the mine at June 30, 2023, are as follows: Machinery $4,000,000 Mine in the development phase $8,350,000 The machinery's value in use has been assessed at $4,500,000 while the fair value less costs to sell is $3,800,000. With respect to the mine, the value in use is $8,000,000 while fair value less costs to sell is $8,200,000. (b) Determine if the machinery and the mine are impaired and prepare the journal entries, if any, to record the impairment at June 30, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Date June 30, 2023 June 30, 2023 (To record the impairment of machinery) (To record the impairment of mine) Credit
Ayayai Corp., a mining company, owns a significant mineral deposit in a northern territory. Ayayai prepares financial statements in accordance with IFRS. Included in the asset is a road system that was constructed to give company personnel access to the mineral deposit for maintenance and mining activity. The road system cannot be sold separately and separate cash flow information is not available for it. The carrying amounts of two cash-generating units of the mine at June 30, 2023, are as follows: Machinery $4,000,000 Mine in the development phase $8,350,000 The machinery's value in use has been assessed at $4,500,000 while the fair value less costs to sell is $3,800,000. With respect to the mine, the value in use is $8,000,000 while fair value less costs to sell is $8,200,000. (b) Determine if the machinery and the mine are impaired and prepare the journal entries, if any, to record the impairment at June 30, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Date June 30, 2023 June 30, 2023 (To record the impairment of machinery) (To record the impairment of mine) Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Ayayai Corp., a mining company, owns a significant mineral deposit in a northern territory. Ayayai prepares financial statements in
accordance with IFRS. Included in the asset is a road system that was constructed to give company personnel access to the mineral
deposit for maintenance and mining activity. The road system cannot be sold separately and separate cash flow information is not
available for it. The carrying amounts of two cash-generating units of the mine at June 30, 2023, are as follows:
Machinery
Mine in the development phase
The machinery's value in use has been assessed at $4,500,000 while the fair value less costs to sell is $3,800,000. With respect to the
mine, the value in use is $8,000,000 while fair value less costs to sell is $8,200,000.
$4,000,000
$8,350,000
(b) Determine if the machinery and the mine are impaired and prepare the journal entries, if any, to record the impairment at June 30,
2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Account Titles and Explanation
Date
June 30,
2023
June 30,
2023
(To record the impairment of machinery)
(To record the impairment of mine)
Debit
Credit
MT
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