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    Non-Current Assets Held For Sale: CA51016 - 2MA1

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    The Brain Dump PH
    This document describes a piece of equipment that was reclassified as an asset held for sale on March 31, 2019. It provides the carrying amount and depreciation details of the equipment as of January 1, 2019 and the fair values less costs to sell as of March 31, 2019 and December 31, 2019. The required part asks for the accounting entries to record the reclassification and subsequent measurements as of the given dates under the initial fair values and an alternative assumption where the December fair value decreases.

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    Non-Current Assets Held For Sale: CA51016 - 2MA1

    Uploaded by

    The Brain Dump PH
    911 views21 pages
    This document describes a piece of equipment that was reclassified as an asset held for sale on March 31, 2019. It provides the carrying amount and depreciation details of the equipment as of January 1, 2019 and the fair values less costs to sell as of March 31, 2019 and December 31, 2019. The required part asks for the accounting entries to record the reclassification and subsequent measurements as of the given dates under the initial fair values and an alternative assumption where the December fair value decreases.

    Original Description:

    CA51016 (Intermediate Accounting 2)

    Original Title

    2MA1-Problem-6-3-6-4.pptx

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    This document describes a piece of equipment that was reclassified as an asset held for sale on March 31, 2019. It provides the carrying amount and depreciation details of the equipment as of January 1, 2019 and the fair values less costs to sell as of March 31, 2019 and December 31, 2019. The required part asks for the accounting entries to record the reclassification and subsequent measurements as of the given dates under the initial fair values and an alternative assumption where the December fair value decreases.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    911 views21 pages

    Non-Current Assets Held For Sale: CA51016 - 2MA1

    Uploaded by

    The Brain Dump PH
    This document describes a piece of equipment that was reclassified as an asset held for sale on March 31, 2019. It provides the carrying amount and depreciation details of the equipment as of January 1, 2019 and the fair values less costs to sell as of March 31, 2019 and December 31, 2019. The required part asks for the accounting entries to record the reclassification and subsequent measurements as of the given dates under the initial fair values and an alternative assumption where the December fair value decreases.

    Copyright:

    © All Rights Reserved
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    of 21

    Non-current Assets

    Held for Sale


    CA51016 - 2MA1
    Problem 6-3
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:

    Fair value less cost to sell on March 31, 2019 P 36,000


    Fair value less cost to sell on December 31, 2019 40,000

    REQUIRED:

    (a) Give the entries on March 31, 2019 and December 31, 2019 as a result of the
    foregoing.
    (b) Assume instead that the fair value less cost to sell on December 31, 2019
    decreased to P35,000. Give the entry on December 31, 2019
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:

    Fair value less cost to sell on March 31, 2019 P 36,000


    Fair value less cost to sell on December 31, 2019 40,000

    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    result of the foregoing.

    Carrying Amount, January 1, 2019 P 42,000


    Less: Accumulated Depreciation, Jan-Mar 2019
    (3,500)
    (14,000 x 3/12)
    Carrying Amount, March 31, 2019 (Reclassification) P 38,500
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:
    information is available:
    Fair value less cost to sell on March 31, 2019 P 36,000
    Fair value less cost to sell on March 31, 2019 P 36,000
    Fair value less cost to sell on December 31, 2019 40,000
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    result of the foregoing.
    result of the foregoing.

    Carrying Amount-March 31, 2019 P 38,500

    Fair value less cost to sell-March 31, 2019 (LOWER) 36,000

    Initial Amount of NCAHFS P 36,000


    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:
    information is available:
    Fair value less cost to sell on March 31, 2019 P 36,000
    Fair value less cost to sell on March 31, 2019
    Fair value less cost to sell on December 31, 2019 40,000
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    result of the foregoing.
    result of the foregoing.

    Carrying Amount-March 31, 2019 P 38,500

    Initial Amount of NCAHFS 36,000

    Impairment Loss P 2,500


    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:
    information is available:
    Fair value less cost to sell on March 31, 2019 P 36,000
    Fair value less cost to sell on March 31, 2019
    Fair value less cost to sell on December 31, 2019 40,000
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    result of the foregoing.
    result of the foregoing.

    2019 Depreciation Expense (14,000X3/12) 3,500


    Mar. 31 Accumulated Depreciation 3,500
    Asset Held for Sale 36,000
    Impairment Loss 2,500
    Accumulated Depreciation (70,000 x 2.25/5) 31,500
    Equipment (42,000 ÷ 3/5) 70,000
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:
    information is available:
    Fair value less cost to sell on March 31, 2019 P 36,000
    Fair value less cost to sell on March 31, 2019
    Fair value less cost to sell on December 31, 2019 40,000
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    result of the foregoing.
    result of the foregoing.

    Initial Amount of NCAHFS P 36,000

    Fair value less cost to sell-December 31, 2019 40,000

    Subsequent increase in FV P 4,000


    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:
    information is available:
    Fair value less cost to sell on March 31, 2019 P 36,000
    Fair value less cost to sell on March 31, 2019
    Fair value less cost to sell on December 31, 2019 40,000
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    REQUIRED: (a) Give the entries on March 31, 2019 and December 31, 2019 as a
    result of the foregoing.
    result of the foregoing.

    2019 Asset Held for Sale 2,500


    Dec. 31 Recovery on Impairment Loss 2,500
    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:

    Fair value less cost to sell on March 31, 2019 P 36,000


    Fair value less cost to sell on December 31, 2019 40,000

    REQUIRED: (b) Assume instead that the fair value less cost to sell on December
    31, 2019 decreased to P35,000. Give the entry on December 31, 2019

    Initial Amount of NCAHFS P 36,000

    Fair value less cost to sell-December 31, 2019 35,000

    Impairment Loss P 1,000


    A piece of equipment with a carrying amount of P42,000 on January 1, 2019
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 5 years on a straight-line basis and has a
    remaining life of 3 years as of January 1, 2019. The following additional
    information is available:

    Fair value less cost to sell on March 31, 2019 P 36,000


    Fair value less cost to sell on December 31, 2019 40,000

    REQUIRED: (b) Assume instead that the fair value less cost to sell on December
    31, 2019 decreased to P35,000. Give the entry on December 31, 2019

    2019 Impairment Loss 1,000


    Dec. 31 Asset Held for Sale 1,000
    Problem 6-4
    A piece of equipment costing P800,000 when acquired on January 1, 2017 meets
    the criteria for classification as Held for Sale on March 31, 2019. The equipment is
    being depreciated over 8 years on a straight-line basis. The following additional
    information is available:

    Fair value less cost to sell on March 31, 2019 P 400,000


    Fair value less cost to sell on December 31, 2019 420,000

    The entity realized that economic conditions affecting the use of the asset
    reversed in the middle of 2020. It, therefore, decided on July 1, 2020 to put back
    the asset to operating use. On this date the asset’s recoverable amount is
    P500,000.

    REQUIRED: Give the entries during 2019 and 2020 relating to this asset.
    A piece of equipment costing P800,000 when acquired on January 1, 2017
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 8 years on a straight-line basis. The
    following additional information is available:

    Fair value less cost to sell on March 31, 2019 P 400,000


    Fair value less cost to sell on December 31, 2019 420,000

    Cost of Equipment P 800,000

    Less: Accumulated Depreciation (800K x 2.25/8) (225,000)


    Carrying Amount-March 31, 2019 P 575,000
    A piece of equipment costing P800,000 when acquired on January 1, 2017
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 8 years on a straight-line basis. The
    following additional information is available:

    Fair value less cost to sell on March 31, 2019 P 400,000


    Fair value less cost to sell on December 31, 2019 420,000

    Carrying Amount-March 31, 2019 P 575,000

    Fair value less cost to sell-March 31, 2019 (LOWER) 400,000


    Initial Amount of NCAHFS P 400,000
    A piece of equipment costing P800,000 when acquired on January 1, 2017
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 8 years on a straight-line basis. The
    following additional information is available:

    Fair value less cost to sell on March 31, 2019 P 400,000


    Fair value less cost to sell on December 31, 2019 420,000

    Carrying Amount-March 31, 2019 P 575,000

    Initial Amount of NCAHFS 400,000

    Impairment Loss P 175,000


    A piece of equipment costing P800,000 when acquired on January 1, 2017
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 8 years on a straight-line basis. The
    following additional information is available:

    Fair value less cost to sell on March 31, 2019 P 400,000


    Fair value less cost to sell on December 31, 2019 420,000

    2019 Depreciation Expense (100,000X3/12) 25,000


    Mar. 31 Accumulated Depreciation 25,000
    Asset Held for Sale 400,000
    Impairment Loss 175,000
    Accumulated Depreciation (800,000 x 2.25/8) 225,000
    Equipment 800,000
    A piece of equipment costing P800,000 when acquired on January 1, 2017
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 8 years on a straight-line basis. The
    following additional information is available:

    Fair value less cost to sell on March 31, 2019 P 400,000


    Fair value less cost to sell on December 31, 2019 420,000

    Initial Amount of NCAHFS P 400,000

    Fair value less cost to sell-December 31, 2019 420,000

    Subsequent increase in FV P 20,000


    A piece of equipment costing P800,000 when acquired on January 1, 2017
    meets the criteria for classification as Held for Sale on March 31, 2019. The
    equipment is being depreciated over 8 years on a straight-line basis. The
    following additional information is available:

    Fair value less cost to sell on March 31, 2019 P 400,000


    Fair value less cost to sell on December 31, 2019 420,000

    2019 Asset Held for Sale 20,000


    Dec. 31 Recovery on Impairment Loss
    20,000
    The entity realized that economic conditions affecting the use of the asset
    reversed in the middle of 2020. It, therefore, decided on July 1, 2020 to put back
    the asset to operating use. On this date the asset’s recoverable amount is
    P500,000.

    Cost P 800,000

    Less: Accumulated Depreciation (800K x 3.5/8) 350,000

    Carrying Amount-July 2020 (as if not reclassified) P 450,000


    The entity realized that economic conditions affecting the use of the asset
    reversed in the middle of 2020. It, therefore, decided on July 1, 2020 to put back
    the asset to operating use. On this date the asset’s recoverable amount is
    P500,000.

    Carrying Amount-July 2020 (as if not reclassified) P 450,000

    Recoverable Amount 500,000

    CA of NCA (Lower between CA and RA) P 450,000


    The entity realized that economic conditions affecting the use of the asset
    reversed in the middle of 2020. It, therefore, decided on July 1, 2020 to put back
    the asset to operating use. On this date the asset’s recoverable amount is
    P500,000.

    CA of Noncurrent Asset P 450,000

    CA of Asset Held for Sale 420,000

    Gain on Reversal (Recovery on Impairment Loss) P 30,000


    The entity realized that economic conditions affecting the use of the asset
    reversed in the middle of 2020. It, therefore, decided on July 1, 2020 to put back
    the asset to operating use. On this date the asset’s recoverable amount is
    P500,000.

    2020 Equipment 800,000


    Jul. 1 Accumulated Depreciation 350,000
    Recovery on Impairment loss 30,000
    Asset held for Sale 420,000

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