original cost of equipment and fair value of equipment

16. Useful life is the number of years we expect to use the asset. Chapter 8 Investing Activities Flashcards | Quizlet An economic condition in which there are so few suppliers of . Property, Plant, and Equipment or fixed assets or tangible assets are the company's . Cost of Property, Plant and Equipment (IAS 16 ... A. Journey to CPA: Practical Accounting 1 Review ? The journal entry to record this exchange will include which of the following entries? Original cost can be used to value an asset . Cr Non-current asset cost [difference between valuation and original cost/valuation] EXAMPLE 8 The carrying amount of Zen Co's property at the end of the year amounted to $108,000 (cost/value $125,000 and accumulated depreciation $17,000). The new equipment has a fair value of $10,000. original cost of equipment and fair value of equipment Property, plant and equipment | ACCA Global Original Manufacturer part number is EP8775LK / 78-6969-9295-3 OEM (Original Equipment Manufacturer) lamps are produced by the projector manufacturer and are identical to the lamps supplied origin. It looks at the costs of acquisition, replacement costs, utility, market demand, the risk involved and similar properties. The partnership accepted responsibility for the $35,000 mortgage attached to the property. Credit gain on exchange of asset $40,000 c. Credit equipment . Solved 2. Lecherous Company traded a used equipment for a ... The carrying value, or book value, is an asset value based on the company's balance sheet, which takes the cost of the asset and subtracts its depreciation over time.The fair value of an asset is . The book value and fair value of the equipment were $20,000 (original . Equipment replacement costs are always higher than the equipment's market value. On December 31, 2005, Vey Co. traded equipment with an original cost of $100,000 and accumulated depreciation of $40,000 for productive equipment with a fair value of $60,000. Equipment with a fair value of $65,000 and a cost basis of $60,000 is transferred to a creditor in partial settlement of a debt of $150,000 plus accrued interest of $7,500. property with a $36,000 carrying amount, a $40,000 original cost,and $80,000 fair value. Cost of the new equipment. Example of Historical Cost and Fair Value. The term that refers to costs incurred in the past that are not relevant to a future decision is . The original cost of this piece of equipment would be $20,000 + $1,000 + $700 + $3,000 = $24,700. On January 1, Year 1, Crater, Inc. purchased equipment having an estimated salvage value equal to 20% of its original cost at the end of a 10-year life. Solved Please provide explanations of how you found each ... Guidance is available in IFRS 13. d. the cash flows from the equipment are less than its fair value. On September 3, 2021, the Robers Company exchanged ... Historical Cost vs Fair Value. Assume the exchange has commercial substance. A net book value calculation starts with unadjusted original cost and is depreciated until NBV reaches zero for tax, or a salvage value amount for financial reporting, which is commonly observed to be assumed to be zero in practice.The cost approach to value starts with reproduction or replacement cost new and is depreciated with an age/life analysis, but not beyond a salvage . What is the total gain/loss […] The facts of the exchange are as follows: Robers' Asset Phifer's Asset Original cost $ 190,000 $ 210,000 Accumulated depreciation 111,000 119,000 Fair value 96,000 77,000 To equalize the exchange, Phifer paid Robers $19,000 in cash. c. the carrying amount of the equipment exceeds its fair value and is deemed not recoverable. Cost of the new equipment. The original cost of the old equipment was $100,000, and its accumulated depreciation at the date of exchange was $60,000. Original fair market value of the old equipment. If the fair value of neither the asset received nor the asset given up is reliably measurable, the asset received is recognised at cost that is the same as the carrying amount of . Accounting. The December 31, 2012 and 2011 comparative financial statements of World Gallery Company showed equipment with an original cost P379,000 and P344,000 with accumulated depreciation of P153,000 and P128,000, respectively. Fair value falls in the middle of these equipment appraisals. To equalize fair values, Calaveras paid $8,000 in cash. How much is the carrying value of the equipment on December 31, 2021? Explanation: 405. What should be Vey's carrying amount for the equipment received at December 31, 2005? investment property at fair value, with changes in fair value recognized in the income statement. original cost of equipment and fair value of equipment. Required: Prepare journal entries to record each of the above transactions. by // July 27, 2021 // No Comments . The original cost of the old equipment was $100,000, and its accumulated depreciation at the date of exchange was $60,000. Operating costs of the old equipment. How much is the book value of the equipment at the end of the second year? )Shellfish Company determined that, due to the obsolescence, equipment with an original cost of P180,000 and accumulated depreciation at January 1, 2020 of P84,000 had suffered permanent impairment, and as a result should have fair value of only P60,000 as of the beginning of the year. Answers: 3 on a question: On September 3, 2021, the Robers Company exchanged equipment with Phifer Corporation. Suppose on December 31, 2012 Axe Ltd. revalues the building again to find out that the fair value should be $160,000. The journal entry to record this exchange will include which of the following entries? The term that refers to costs incurred in the past that are not relevant to a future decision is . Old equipment: Original cost Accumulated depreciation Fair value -unknown 1,000,000 600,000 New equipment: List price Cash price without trade in Cash payment with trade in 1,600,000 1,400,000 980,000 Required: Prepare journal entry to record the exchange transaction. Carrying amount of CGU 13,000, Value in use 8,500, Impairment loss 4,500, Impairment loss allocated to goodwill 1,000, Remaining impairment loss 3,500, Carrying amount Fraction Loss Land 2,500,000 25/100 875, Plant and equipment 7,500,000 75/100 2,625, 10,000,000 3,500, No impairment loss is allocated to inventory because the fair value less cost of disposal of inventory is higher than . Asset Value. d. the cash flows from the equipment are less than its fair value. Old equipment: Original cost 1,000,000 Accumulated depreciation 600,000 Fair value - unknown New equipment: List price 1,600,000 Cash price without trade in 1,400,000 Cash payment with trade in 980,000 Required: Prepare journal entry to record the exchange transaction. D. Gain. Assume the exchange has commercial substance. You record those on the balance sheet. Fair value is not always the same as market value, depending on conditions at . The carrying amount exceeds the fair value by $7,648 so the account balance should be reduced by that amount. The more volatile the fair value, the more frequently revaluations should be carried out. Lecherous Company traded a used equipment for a newer model with a dealer. Carrying amount as at December 31, 2012 is $190,000 minus 2 years depreciation of $22,352 which amounts to $167,648. ? On this date the property was revalued and was deemed to have a fair value of $95,000. Fair value is determined by using a solid methodology that is unbiased and is based on rational processes of determining the value. The option to account for the property at fair value applies to leased property. Historical cost is understated and obsolete. Fair value is determined by using a solid methodology that is unbiased and is based on rational processes of determining the value. The book value and fair value of the equipment were $20,000 (original . Fair value is not always the same as market value, depending on conditions at . Accounting. 3M MP8775 lamp (Original Bulb in Original Housing). "Fair value" is defined as whatever price a buyer and seller agree on if they know the market and both want to make the . Credit accumulated depreciation $60,000 b. » original cost of equipment and fair value of equipment | Increasing your profit A-40, Sector-62, Noida, UP - 201301, India +91 0120 2401030 info@xperienceinfinite.com The carrying value, or book value, is an asset value based on the company's balance sheet, which takes the cost of the asset and subtracts its depreciation over time.The fair value of an asset is . Complete this question by entering your answers in the tabs below. A. The exchange has commercial substance. Ceda contributed equipment with a $30,000 carrying amount, a $75,000 original cost, and $55, fair value. The partnership agreement specifies that profits and losses . Under "fair value" accounting, if the asset gains or loses value during the income-statement period, you treat that as positive or negative income. c. Using the information below, calculate the average total depreciable life . If an asset costs $110, we use it for five years and estimate its worth as $10 at the end of its five-year useful life, then annual depreciation is ($110- $10) ÷ 5 = $20 per year. Let's understand the historical cost vs. fair value with an example. The old equipment had an original cost of $7,400 and a book value of $3,000 at the time of the trade. Property, Plant, and Equipment or fixed assets or tangible assets are the company's . respectively. D. Fair value. Original cost can be used to value an asset . Jo son paid of ,000 as part of the trade. Credit accumulated depreciation $60,000 b. Historical cost is the original price spent to acquire the asset. The new asset received had a fair value of $80,000 and a book value of $65,000. The new asset is recorded at $400,000, the fair value of the old equipment, $300,000, plus the cash given, $100,000. ABC Ltd acquires land at $100,000 in 2002. The balance on . c. the carrying amount of the equipment exceeds its fair value and is deemed not recoverable. Question: Calaveras Tire exchanged equipment for two pickup trucks. Fair value is also known as intrinsic value, actuarial value, market price, etc. Original fair market value of the old equipment. After two years, the fair value of the equipment is $82,000. a. the original cost of the equipment exceeds its fair value and is deemed not recoverable b. management determines that the equipment will no longer be used. The book value and fair value of the equipment were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively. C. Extracted. a. Delivery truck 2. Cost approach. In equipment-replacement decisions, which one of the following does not affect the decision-making process? Required: Record the exchange for both Robers . Cost is the original cost to place the asset in service. Historical cost is understated and obsolete. $30,000 B . The book value and fair value of the equipment were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively. Fair value is the price at which the asset can be sold in the market. The old asset's account and accumulated depreciation are written off for their balances at the date of the exchange, and cash paid is recorded. View Answer: Answer: Option B. Lecherous Company traded a used equipment for a newer model with a dealer. The actual market price of that land in 2018 is around $1.75 million. Credit gain on exchange of asset $40,000 c. Credit equipment . Question: Calaveras Tire exchanged equipment for two pickup trucks. Where the . Suppose on December 31, 2012 Axe Ltd. revalues the building again to find out that the fair value should be $160,000. To equalize market values of the exchanged assets, China Inn paid $7,400 in cash to Midwest Chicken 1. To equalize fair values, Calaveras paid $8,000 in cash. The balance on . Property, Plant, and Equipment. Show Result Related MCQs? Transactions 1 to 5 . In equipment-replacement decisions, which one of the following does not affect the decision-making process? Also known as historical cost, a common term in . The balance of the debt will be satisfied by 3 equal payments of $30,000 over the next three years. The fair value of the asset acquired is determined with reference to the fair value of asset given up, unless only the fair value of the asset received can be measured reliably or is more clearly evident (IAS 16.26). Residual value is the estimated value of the asset when the entity is finished using it. Depreciation. But it's also because market value doesn't cover expenses associated with the logistics of replacing the equipment . There is commercial substance to the exchange. If the market value is not available, fair value is estimated using depreciated replacement cost. Historical cost is the original price spent to acquire the asset. Asset Value. In addition, Vey received $30,000 cash in connection with this exchange. Show Result Related MCQs? That's partially because market value takes depreciation into account (meaning it measures the property's value based on what you would get if you were to have sold the equipment as-is). Which is the asset: original cost of equipment and fair value of equipment? The original cost of this piece of equipment would be $20,000 + $1,000 + $700 + $3,000 = $24,700. ____ is the loss of value of the equipment with use over a period of time. In addition, Vey received $30,000 cash in connection with this exchange. What amount should the company report as depreciation expense . It could mean a difference in value between a new asset and the use asset currently in a service. Explanation: 404. Fair value falls in the middle of these equipment appraisals. B. a. the original cost of the equipment exceeds its fair value and is deemed not recoverable b. management determines that the equipment will no longer be used. Lecherous Company traded a used equipment for a newer model with a dealer. Operating costs of the old equipment. Historical Cost vs Fair Value. Cr Non-current asset cost [difference between valuation and original cost/valuation] EXAMPLE 8 The carrying amount of Zen Co's property at the end of the year amounted to $108,000 (cost/value $125,000 and accumulated depreciation $17,000). There is commercial substance to the exchange. Also known as historical cost, a common term in . On this date the property was revalued and was deemed to have a fair value of $95,000. Accumulated depreciation is the asset's original cost, $500,000, minus book value, $260,000. These are the significant differences between U.S. GAAP and IFRS with respect to accounting for property, plant and equipment and investment property, except for . Guidance is available in IFRS 13. a. Normally, the income statement doesn't detail assets such as investments or equipment. Property, Plant, and Equipment. Fair value is the price at which the asset can be sold in the market. The fair value and book value of the equipment were $16,000 and $10,600 (original cost of $33,000 less accumulated depreciation of $22.400). A. At what amount did China Inn record the delivery truck? How much gain or loss dld China Inn recognize on the exchange? Which is the asset: original cost of equipment and fair value of equipment? During 2012, the company purchased equipment costing P50,000, and sold equipment with a carrying value of P4,000. Loss . The equipment was sold December 31, Year 5, for 50% of its original cost. In case of plant & equipment, fair value is usually market value. On December 31, 2005, Vey Co. traded equipment with an original cost of $100,000 and accumulated depreciation of $40,000 for productive equipment with a fair value of $60,000. Carrying amount as at December 31, 2012 is $190,000 minus 2 years depreciation of $22,352 which amounts to $167,648. The original cost of a piece of equipment was $100,000. 2. What should be Vey's carrying amount for the equipment received at December 31, 2005? The fair value of the asset acquired is determined with reference to the fair value of asset given up, unless only the fair value of the asset received can be measured reliably or is more clearly evident (IAS 16.26). Guidance is available in IAS 16. The gain of $40,000 is the difference . c. Using the information below, calculate the average total depreciable life . The carrying amount exceeds the fair value by $7,648 so the account balance should be reduced by that amount. If the fair value of neither the asset received nor the asset given up is reliably measurable, the asset received is recognised at cost that is the same as the carrying amount of . $30,000 B . The equipment was depreciated using the straight-line method with annual depreciation of $20,000. The new asset received had a fair value of $80,000 and a book value of $65,000. The frequency of valuation depends on the volatility of the fair values of the individual items of property, plant and equipment. If the equipment's disposition resulted in a reported loss, which of the following depreciation methods did Crater use? View Answer: Answer: Option B. Guidance is available in IAS 16. It looks at the costs of acquisition, replacement costs, utility, market demand, the risk involved and similar properties. 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