Question 3: Non-monetary Exchange (12 marks) Nimble Deliveries Inc. exchanged a large delivery truck (fair...
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Accounting
Question 3: Non-monetary Exchange (12 marks)
Nimble Deliveries Inc. exchanged a large delivery truck (fair value of $150,000; original cost of $425,000; accumulated depreciation of $260,000) for a different truck that belonged to Long-Distance Movers. The truck from Long-Distance Movers has a fair value of $180,000, original cost of $500,000, and accumulated deprecation of $305,000. All amounts have been updated to the date of the exchange.
Required:
Prepare the journal entry for Nimble Deliveries Inc. for this exchange, assuming:
The exchange has commercial substance
The exchange lacks commercial substance
Note: You do not need to provide the entries for Long-Distance Movers.
Question 4: Impairment (8 marks)
Sage Corporation's balance sheet includes the following asset:
Equipment: $275,000
Accumulated depreciation: 85,000
Sage was notified of a significant change in the technology used to power the equipment and decided to test for impairment. Sage obtained the following data:
Future cash flows (undiscounted): $125,000
Value in use (discounted): 120,000
Fair value: 160,000
Selling costs: 8,000
Required:
Assuming Sage follows ASPE, calculate if the asset is impaired, and prepare any journal entries required. Show your calculations.
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