Discussion Questions– Property, Plant & Equipment Subsequent Measurement

Please answer the following questions taken from Intermediate Accounting IFRS Edition (4th Edition) (Kieso,
Weygandt and Warfield ,2020)

Chapter 10

E 10.24

Take note, no residual value, Full year on year of acquisition and none in year of disposal

Disposal of building: Need to calculate Gain or Loss : FV-BV

30/1 Accumulated Depreciation—Buildings ..................................... 95,200*

Loss on Disposal of Machinery ................................................ 21,900**
Buildings ....................................................................... 112,000
Cash ............................................................................. 5,100

*(5% X $112,000 = $5,600; $5,600 X 17 = $95,200)

**($112,000 – $95,200) + $5,100

Sale of machine: Need to calculate Gain or loss

FOB purchaser’s plant means seller is obligated to pay freight cost

10/3 Cash ($2,900 – $300) .............................................................. 2,600

Accumulated Depreciation—Machinery ................................... 11,200*
Loss on Disposal of Machinery ................................................ 2,200**
Machinery ..................................................................... 16,000

*(10% X $16,000 = $1,600; 7 X $1,600 = $11,200)

**($16,000 – $11,200) + $300 – $2,900

20/3 Maintenance and Repairs Expense ......................................... 3,000

Cash ............................................................................. 3,000

1
 Remove cost of old base and include cost of new base

18/5 Machinery ................................................................................. 5,500

Accumulated Depreciation—Machinery ................................... 2,400*
Loss on Disposal of Machinery ................................................ 1,600**
Machinery ..................................................................... 4,000
Cash ............................................................................. 5,500
*(10% X $4,000 = $400; 6 X $400 = $2,400)
**($4,000 – $2,400)

6/23 Maintenance and Repairs Expense ......................................... 6,900

Cash ............................................................................. 6,900

Chapter 11

EXERCISE 11.12

(a) 1996–2005—(€1,900,000 – €60,000) ÷ 40 = €46,000/yr.

(b) 2006–2023—Building (€1,900,000 – €60,000) ÷ 40 = €46,000/yr.

Addition (€470,000 – €20,000) ÷ 30 = €15,000/yr.
€61,000/yr.
(c) No adjusting entry required.

(d) Revised annual depreciation

Building
Book value: (€1,900,000 – €1,288,000*) .................................... €612,000
Residual value ............................................................................. (60,000)
552,000
Remaining useful life.................................................................... ÷ 32 years
Annual depreciation ..................................................................... € 17,250

*€46,000 X *28 years = €1,288,000

Addition
Book value: (€470,000 – €270,000**) ......................................... €200,000
Residual value ............................................................................. (20,000)
2
 180,000
Remaining useful life.................................................................... ÷ 32 years
Annual depreciation ..................................................................... € 5,625
**€15,000 X 18 years = €270,000

Annual depreciation expense—building (€17,250 + €5,625) €22,875

EXERCISE 11.25

Other Comprehensive Accumulated Other

Value at Income Comprehensive Income Recognized in Net
December 31 Income

2020 ¥50,000 ¥50,000 —

2021 (50,000) — (¥40,000)
2022 — — 25,000
2023 10,000 10,000 15,000
2024 50,000 60,000 —

EXERCISE 11.26
December 31, 2020
Land (¥450,000 – ¥400,000) .............................................................. 50,000
Unrealized Gain on Revaluation—Land ................................... 50,000

December 31, 2021

Unrealized Gain on Revaluation—Land ............................................. 50,000
Loss on Impairment (¥400,000 – ¥360,000)....................................... 40,000
Land (¥450,000 – ¥360,000) .................................................... 90,000

December 31, 2022

Land (¥385,000 – ¥360,000) .............................................................. 25,000
Recovery of Impairment Loss .................................................. 25,000

December 31, 2023

Land (¥410,000 – ¥385,000) .............................................................. 25,000
Recovery of Impairment Loss
(¥40,000 – ¥25,000) .............................................................. 15,000
Unrealized Gain on Revaluation—Land ................................... 10,000

December 31, 2024

Land (¥460,000 – ¥410,000) .............................................................. 50,000
Unrealized Gain on Revaluation—Land ................................... 50,000