Question about PPE and impairment loss

"Dr. Accumulated Depreciation (6 x 2years) 18" Before I go any further, do you want to rethink this line from your post - maybe have a calculator handy! OK?

I just found that I write the date incorrectly, but I cannot find which figure I calculated wrong. The journal entries: 1 Jan 2001 Dr. PPE 280 Cr. Bank 280 31 Dec 2001 Dr. Depreciation (280/20) 14 Cr. Accumulated Dep. 14 31 Dec 2010 Dr. Accumulated Depreciation (14 x 10 years) 140 Cr. PPE 140 Dr. Revaluation deficit (60-(280-140)) 80 Cr. PPE 80 I think my answer above is right, but I confuse if PPE question with impairment loss If the question says 2 years after the recoverable amount is $40 31 Dec 2012 Dr. Depreciation ($60/10 years) 6 Cr. Accumulated Depreciation 6 Dr. Accumulated Depreciation (6 x 2years) 18 Cr. PPE 18 Dr. Revaluation deficit 2 (40-(60-18)) PPE 2 The answer is 2 because I think FV($60) – Accumulated Dep ($18) = $42 carrying amount. Then, the impairment loss(CA>RA) is $42-$40 =$2 I would like to know whether the $2 impairment loss is treated as the revaluation deficit, just like my working? Also, I would like to know how to deal with reversal impairment loss. As I know, reversal impairment loss is the CA<RA if after 2 years the recoverable amount is $50 31 Dec 2014 Dr. Depreciation ($40/8 years) 5 Cr. Accumulated Depreciation 5 Dr. Accumulated Depreciation (5 x 2 years) 10 Cr. PPE 10 Dr. PPE 20 Cr. Reversal of impairment loss (50-30) 20

Do you see the line in your post that reads "Dr Accumulated Depreciation (6 x 2 years) 18" Do you think that maybe there's something wrong in that line? Try again!

Sorry for my carelessness. I have corrected it. The journal entries: 1 Jan 2001 Dr. PPE 280 Cr. Bank 280 31 Dec 2001 Dr. Depreciation (280/20) 14 Cr. Accumulated Dep. 14 31 Dec 2010 Dr. Accumulated Depreciation (14 x 10 years) 140 Cr. PPE 140 Dr. Revaluation deficit (60-(280-140)) 80 Cr. PPE 80 I think my answer above is right, but I confuse if PPE question with the impairment loss If the question says 2 years after the recoverable amount is $40 31 Dec 2012 Dr. Depreciation ($60/10 years) 6 Cr. Accumulated Depreciation 6 Dr. Accumulated Depreciation (6 x 2years) 12 Cr. PPE 12 Dr. Revaluation deficit 8 (40-(60-12)) PPE 8 The answer is 2 because I think FV($60) – Accumulated Dep ($12) = $48 carrying amount. Then, the impairment loss(CA>RA) is $48-$40 =$8 I would like to know whether the $8 impairment loss is treated as the revaluation deficit or just write dr. impairment loss? Also, I would like to know how to deal with reversal impairment loss. As I know, reversal impairment loss is the CA<RA if after 2 years the recoverable amount is $50 31 Dec 2014 Dr. Depreciation ($40/8 years) 5 Cr. Accumulated Depreciation 5 Dr. Accumulated Depreciation (5 x 2 years) 10 Cr. PPE 10 Dr. PPE 20 Cr. Reversal of impairment loss (50-30) 20

You still have an uncorrected error ... here "The answer is 2 because I think FV($60) – Accumulated Dep ($12) = $48 carrying amount. Then, the impairment loss(CA>RA) is $48-$40 =$8" This should read "The answer is 8 because ..." Now let's start again On the acquisition we have: Dr PPE 280 Cr Cash 280 For 10 years we depreciate at the rate of 14 each year so we have, over that 10 years: Dr Depreciation Expense Account in Statement of Profit or Loss 140 Cr Accumulated Depreciation Account 140 Our asset now has a net carrying value of 280 - 140 = 140 We impair it down to 60 Dr Depreciation Expense Account in Statement of Profit or Loss 80 Cr Accumulated Depreciation Account 80 and our asset now has a net carrying value of 60 to be depreciated over the remaining 10 years at the rate of 6 each year Over the next 2 years we account for this annual depreciation charge of 6: Dr Depreciation Expense Account in Statement of Profit or Loss 12 Cr Accumulated Depreciation Account 12 and our asset now has a net carrying value of 48 at which time we impair it further down to 40 Dr Depreciation Expense Account in Statement of Profit or Loss 8 Cr Accumulated Depreciation Account 8 and our asset now has a net carrying value of 40 to be depreciated over the remaining 8 years at the rate of 5 each year So 2 years later, at the depreciation rate of 5 each year, we have: Dr Depreciation Expense Account in Statement of Profit or Loss 10 Cr Accumulated Depreciation Account 10 and our asset now has a net carrying value of 30 Now you want to know about the reversal of an impairment loss where, with a carrying value of 30, we re-assess the value of the asset and arrive at a figure of 50 If we had not impaired after 10 years, that asset would have now been depreciated for 14 years at the rate of 14 each year giving us accumulated depreciation of 196 and a net carrying value of 84 The reason for this last paragraph? We cannot un-impair a previously impaired asset to a value that it would have been had we not impaired it So our revised valuation of 50 (when the asset is 14 years old) that involves the reversal of a previous impairment is potentially restricted If we hadn't made that first impairment, the carrying value would have been 84 so there's no restriction applicable - we can un-impair from a carrying value of 30 back up to 50 to be depreciated over the remaining 6 years Dr Accumulated Depreciation Account 20 Cr Depreciation Expense Account in Statement of Profit or Loss 20 Is that OK?

2 days and no response - I'm closing the thread