H company applies revaluation model under IAS 16 for its PPES and choose to transfer the revaluation surp

H purchased an equipment for $500,000, which has 10 year useful life and no residual value. H does not int
time and residual value throughout the equipment's life.

However, on January 2 20X5, H sold the equipment for $330,000. There is no impairment for the assets fro
December. Following are information about this equipment:

Date Fair value

2 Jan 20X2 500,000
31 Dec 20X2 468,000
31 Dec 20X3 380,000
31 Dec 20X4 335,000
1. Prepare journal entries related to this equipment in 20X2, 20X3, 20X4 and on the date 2 Jan 20X5

20X2
2-Jan PPE (equipment) 500,000
Cash
31-Dec Depreciation Expense 49,863
Accumulated Depreciation
PPE (equipment) 17,863
OCI-gain on revaluation
20X3
31-Dec Depreciation Expense 52,000
Accumulated Depreciation
Loss on revaluation 18,137
OCI- gain on revaluation 17,863
PPE (equipment)
20X4
31-Dec Depreciation Expense 47,500
Accumulated Depreciation
PPE (equipment) 2,500
Loss on revaluation
20X5
2-Jan Depreciation Expense 262
Accumulated Depreciation
Accumulated Depreciation 149,625
Cash 330,000
Loss on sale 4,738
PPE (equipment)

2. Present information related to this equipment on the SoFP at the end of 20X2, 20X3, 20X4
Statement of Financial Position
31/12/20X2 31/12/20X3
ASSETS
Cash (500,000) (500,000)
PPE-net 468,000 380,000
Cost 517,863 481,863
Accumulated Depreciation (49,863) (101,863)
Total Assets (32,000) (120,000)
LIABILITIES &EQUITY
Revaluation surplus 17,863
Retained earnings (49,863) (120,000)
Total Equity (32,000) (120,000)
sfer the revaluation surplus when assets are sold. On January 2 20X2,
al value. H does not intend to change the estimation on the useful

rment for the assets from 20X2 to 20X5. H's fiscal year ended at 31

on the date 2 Jan 20X5

500,000
(500,000/10/365×364)
49,863
[468,000-(500,000-49,863)]
17,863

(468,000/9)
52,000
(36,000-18,137)

36,000 [(468,000-52,000)-380,000)]

(380,000/8)
47,500
[335,000-(380,000-47,500)]
2,500

(335,000/7/365×2)
262
(49,863+52,000+47,500+262)

[(484,363-149,625)-330,000]
484,363 (500,000+17,863-36,000+2,500)

2, 20X3, 20X4

31/12/20X4
(500,000)
335,000
484,363
(149,363)
(165,000)

(165,000)
(165,000)
During preparation of financial statements for the year ended 31 December 20X3, management of Swimme
of its assets. There was an external indication that boat operating in Aquatica river might be impaired. Acqu
EUR (in January 20X1), its useful life is 10 years and Swimmers apply cost model with straight-line deprec
market research, Swimmers' managers estimate current market value of boat to 316 000 EUR. In the case o
bear costs of final cleaning and preparation estimated to 14 000 EUR.

Calculate impairment loss of boat as of 31 December 20X3 and show the appropriate accounting trea
Carrying amount = Acquisition cost
= 600,000
= 420,000
Fair value - Cost to sell = 316,000 -
Value in use = 326,926 (data from 3.2)
Recoverable amount (higher of) = 326,926
Impairment = 93,074 (420,000-326,926)

P/L-Impairment loss 93,074

PPE 93,074
Calculate depreciation charge of boat for the year 20X4.
Carrying amount of PPE at the end of 20X3 326,926 (420,000-93,074)
Remaining useful life 7
Depreciation of PPE for 20X4 46,704 (326,926/7)
 20X3, management of Swimmers Co. performs impairment testing
ca river might be impaired. Acquisition cost of boat was 600 000
t model with straight-line depreciation method. Based on current
at to 316 000 EUR. In the case of sale, Swimmers would have to

he appropriate accounting treatment.

- Accumulated depreciation
- 180,000 (600,000/10×3)

14,000 = 302,000
ata from 3.2)

20,000-326,926)

0,000-93,074)