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    INTERMEDIATE ACCOUNTING - MIDTERM - 2019-2020 - 2nd Semester - PART3

    Uploaded by

    Renalyn Paras
    This document contains 15 multiple choice problems from an intermediate accounting midterm exam. The problems relate to accounting for non-current assets, including equipment and land, that are classified as held for sale. The questions require calculating impairment losses, carrying amounts, and revaluation amounts given various purchase and sale dates and values for the assets.

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    INTERMEDIATE ACCOUNTING - MIDTERM - 2019-2020 - 2nd Semester - PART3

    Uploaded by

    Renalyn Paras
    92 views3 pages
    This document contains 15 multiple choice problems from an intermediate accounting midterm exam. The problems relate to accounting for non-current assets, including equipment and land, that are classified as held for sale. The questions require calculating impairment losses, carrying amounts, and revaluation amounts given various purchase and sale dates and values for the assets.

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    INTERMEDIATE ACCOUNTING_MIDTERM_2019-2020_2nd semester_PART3

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    This document contains 15 multiple choice problems from an intermediate accounting midterm exam. The problems relate to accounting for non-current assets, including equipment and land, that are classified as held for sale. The questions require calculating impairment losses, carrying amounts, and revaluation amounts given various purchase and sale dates and values for the assets.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    92 views3 pages

    INTERMEDIATE ACCOUNTING - MIDTERM - 2019-2020 - 2nd Semester - PART3

    Uploaded by

    Renalyn Paras
    This document contains 15 multiple choice problems from an intermediate accounting midterm exam. The problems relate to accounting for non-current assets, including equipment and land, that are classified as held for sale. The questions require calculating impairment losses, carrying amounts, and revaluation amounts given various purchase and sale dates and values for the assets.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    INTERMEDIATE ACCOUNTING

    MIDTERM EXAMINATION

    ANSWER THE FOLLOWING QUESTIONS. SHOW YOUR SOLUTIONS.

    PART 3

    PROBLEM 11

    Clarita Company purchased equipment for 5,000,000 on January 1, 2017


    with a useful life of 10 years and no residual value.

    On December 31, 2018, the entity classified the equipment as held for sale.
    The fair value of the equipment on December 31, 2018 was 3,300,000 and
    the cost of disposal 100,000.

    On December 31, 2019, the fair value of the equipment was 3,800,000 and
    the cost of disposal 200,000. The value in use was determined to be
    3,300,000.

    On December 31, 2019, the entity believed that the criteria for classification
    as held for sale can no longer be met.

    Accordingly, the entity decided not to sell the asset but to continue to use it.

    What is the impairment loss to be recognized on December 31, 2018?


    ___________________

    PROBLEM 12

    Apple Company purchased an equipment for 5,000,000 on January 1, 2017.


    The equipment had a useful life of 5 years with no residual value.

    On December 31, 2017, the entity classified the equipment as held for sale.
    On such date, the fair value less cost of disposal of the equipment was
    3,500,000.

    On December 31, 2018, the entity believed that the criteria for classification
    as held for sale can no longer be met. Accordingly, the entity decided not to
    sell the equipment but continue to use it.

    On December 31, 2018, the fair value less cost of disposal of the equipment
    was 2,700,000.
    What is the carrying amount of the equipment on December 31, 2017 before
    classification as held for sale?

    ___________________

    PROBLEM 13

    Dean Company accounted for noncurrent assets using the cost model. On
    October 1, 2017, the entity classified a noncurrent asset as held for sale.

    At that date, the carrying amount was 3,200,000, the fair value was
    estimated at 2,200,000 and the cost of disposal at 200,000.

    On December 15, 2017, the asset was sold for net proceeds of 1,850,000.

    What amount should be included as an impairment loss in the statement of


    comprehensive income for the year ended December 31, 2017?
    __________________

    PROBLEM 14

    On January 1, 2017, Ranchelle Company purchased land at a cost of


    6,000,000. The entity used the revaluation model for this asset.

    The fair value of the land was 7,000,000 on December 31, 2017 and
    8,500,000 on December 31, 2018.

    On July 1, 2019, the entity decided to sell the land and therefore classified
    the asset as held for sale.

    The fair value of the land on this date is 7,600,000. The estimated cost of
    disposal is very minimal.

    On December 31, 2019, the land was sold for 8,000,000.

    What amount in OCI should be recognized in the statement of


    comprehensive income for the year ended December 31, 2018?
    ____________________.

    PROBLEM 15

    So Real Company accounted for noncurrent assets using the revaluation


    model. On October 1, 2017, the entity classified a land as held for sale.
    At that date, the carrying amount of the land was 5,000,000 and the balance
    in the revaluation surplus was 1,500,000.

    At same date, the fair value of the land was estimated at 5,500,000 and the
    cost of disposal at 100,000.

    On December 31, 2017, the fair value less cost of disposal of the land did
    not change. The land was sold on January 31, 2018 for 6,000,000.

    What is the impairment loss in 2017? _______________________

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