Select the most correct answer:
An item of property plant and equipment had a carrying amount of C30 000 at reporting date (before performing the review for indications of impairment).
The impairment indicator review at reporting date suggested that this asset could possibly be impaired. The recoverable amount was then estimated to be C25 000 at reporting date.
At the same time, the useful life was re-estimated and found to be shorter than the useful life that had been used for purposes of calculating the asset’s depreciation. Had this shorter useful life been used instead, the carrying amount at reporting date would have been C28 000 (i.e. not C30 000). All amounts are considered to be material.
How do we account for this transaction?

Question

Select the most correct answer: 
   An item of property plant and equipment had a carrying amount of C30 000 at reporting date (before performing the review for indications of impairment). 
 The impairment indicator review at reporting date suggested that this asset could possibly be impaired. The recoverable amount was then estimated to be C25 000 at reporting date. 
 At the same time, the useful life was re-estimated and found to be shorter than the useful life that had been used for purposes of calculating the asset’s depreciation. Had this shorter useful life been used instead, the carrying amount at reporting date would have been C28 000 (i.e. not C30 000). All amounts are considered to be material. 
 How do we account for this transaction?

Answer

debit depreciation and credit the asset’s accumulated depreciation account with C2 000 (thus decreasing the carrying amount to C28 000) and then debit the impairment loss expense and credit the asset’s accumulated impairment loss account with C3 000 (thus decreasing the carrying amount to C25 000)

Answer

debit the impairment loss expense and credit the asset’s accumulated impairment loss account with C5 000 (thus decreasing the carrying amount to C25 000) and then credit depreciation and debit the asset’s accumulated depreciation account with C3 000 (thus increasing the carrying amount to C28 000).

Answer

debit the impairment loss expense and credit the asset’s cost account with C5 000

Answer

debit the impairment loss expense and credit the asset’s accumulated impairment loss account with C5 000

Answer

debit the impairment loss expense with C3 000 and debit depreciation with C2 000 and credit the asset’s accumulated depreciation account with C5 000

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Select the most correct answer: An item of property plant and equipment had ...

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