The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2023: Cost Accumulated depreciation to date $3,600,000 400,000 Expected future net cash flows (undiscounted) 2,800,000 Expected future net cash flows (discounted, value in use) 2,540,000 Fair value 2,480,000 Costs to sell (costs of disposal) 20,000 Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2023, the equipment has a remaining useful life of four years. Sweet Acacia uses the straight-line method of depreciation. Assume that Sweet Acacia is a private company that follows ASPE. (c) × Your answer is incorrect. The equipment's fair value at December 31, 2024, is $2.60 million. Prepare the journal entry, if any, to record the increase in fair value. (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 0 for the amounts. List debit entry before credit entry.) Date Account Titles and Explanation December Accumulated Impairment Losses - Equipment 31, 2024 Recovery of Loss from Impairment Debit 495000 Credit 495000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2023:
Cost
Accumulated depreciation to date
Expected future net cash flows (undiscounted)
$3,600,000
400,000
2,800,000
Expected future net cash flows (discounted, value in use)
2,540,000
Fair value
Costs to sell (costs of disposal)
2,480,000
20,000
Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2023, the equipment has a remaining useful
life of four years. Sweet Acacia uses the straight-line method of depreciation. Assume that Sweet Acacia is a private company that
follows ASPE.
(c)
* Your answer is incorrect.
The equipment's fair value at December 31, 2024, is $2.60 million. Prepare the journal entry, if any, to record the increase in fair
value. (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 0 for the amounts. List debit entry before credit entry.)
Date
Account Titles and Explanation
December
31, 2024
Accumulated Impairment Losses - Equipment
Recovery of Loss from Impairment
Debit
495000
Credit
495000
Transcribed Image Text:The information that follows relates to equipment owned by Sweet Acacia Limited at December 31, 2023: Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) $3,600,000 400,000 2,800,000 Expected future net cash flows (discounted, value in use) 2,540,000 Fair value Costs to sell (costs of disposal) 2,480,000 20,000 Assume that Sweet Acacia will continue to use this asset in the future. As at December 31, 2023, the equipment has a remaining useful life of four years. Sweet Acacia uses the straight-line method of depreciation. Assume that Sweet Acacia is a private company that follows ASPE. (c) * Your answer is incorrect. The equipment's fair value at December 31, 2024, is $2.60 million. Prepare the journal entry, if any, to record the increase in fair value. (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 0 for the amounts. List debit entry before credit entry.) Date Account Titles and Explanation December 31, 2024 Accumulated Impairment Losses - Equipment Recovery of Loss from Impairment Debit 495000 Credit 495000
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