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Misc. Four Accounting Problems

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Question;1. Do IFRS and US GAAP differ related to determining whether an asset is impaired? If so, explain.2. On January 1, 2006, Thompson Company purchased manufacturing equipment for $2.1 million. The equipment has a useful life of seven years and no residual value. Thompson Company plans to depreciate the equipment on a straight-line basis.On January 1, 2010, the equipment?s fair value (net of accumulated depreciation) has increased to $2.4 million. Assuming Thompson Company follows the revaluation model, what is Thompson?s depreciation expense in 2006-2012? How would depreciation expense differ using US GAAP?3. The information provided below is related to equipment owned by CollierCompany at December 31, 2007.Cost $5,000,000Accumulated Depreciation 2,000,000Expected future net cash flows (undiscounted) 3,000,000Expected future net cash flows (discounted) 2,700,000Fair value 2,500,000Remaining useful life of asset 3 YearsWhat is the impairment loss for Collier Company under a) IFRS and b) US GAAP?4. An asset was purchased on January 1, 2006 for $1,000,000 with a useful life of 10 years and no salvage value. The company accounts for the asset under IFRS using the cost model. During the year, the asset is deemed impaired and written down by $400,000. Assuming the asset increases in value to $800,000, what is the carrying value of the asset on December 31, 2007? Assuming the asset increases in value to $900,000, what is the carrying value of the asset on December 31, 2007? How would the reversal of impairment be treated under US GAAP?

 

Paper#43329 | Written in 18-Jul-2015

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