Question

Exercise 11-2 Ayayai Corp. acquired a property on September 15, 2020, for $220,000, paying $3,000 in transfer taxes and a $1,500 real estate fee. Based on the provincial assessment information, 75% of the property’s value was related to the building and 25% to the land. It is estimated that the building, with proper maintenance, will last for 20 years, at which time it will be torn down and have zero salvage value. Ayayai, however, expects to use it for 10 years only, as it is not expected to suit the company’s purposes after that. The company should be able to sell the property for $155,000 at that time, with $40,000 of this amount being for the land. Ayayai prepares financial statements in accordance with IFRS. Depreciation expense should be calculated to the nearest half month. 1.Assuming a December 31 year end, identify the building’s cost. Cost of the building $enter the Cost of the building in dollars 2.Assuming a December 31 year end, identify the building’s depreciable amount. Depreciable amount $enter the Depreciable amount in dollars 3.Assuming a December 31 year end, identify the building’s useful life. Building’s useful life enter the Building’s useful life in years years 4.Assuming a December 31 year end, identify the depreciation expense for 2020, assuming the straight-line method. (Do not round intermediate calculations and round answer to 0 decimal places, e.g. 5,275.) Depreciation expense for 2020 $enter the Depreciation expense for 2020 in dollars rounded to 0 decimal places 5.Assuming a December 31 year end, identify the depreciation expense for 2021, assuming the double-declining-balance method. (Do not round intermediate calculation and round answer to 0 decimal places, e.g. 5,275.) Depreciation expense for 2021 $enter the Depreciation expense for 2021 in dollars rounded to 0 decimal places 6.Assuming a December 31 year end, identify the building’s carrying amount at December 31, 2021, assuming the double-declining-balance method. (Do not round intermediate calculation and round answer to 0 decimal places, e.g. 5,275.) Building’s carrying amount $enter the Building’s carrying amount in dollars rounded to 0 decimal places 7.Assuming a December 31 year end, identify the depreciation expense for 2020, assuming the straight-line method and assuming Ayayai prepares financial statements in accordance with ASPE. (Do not round intermediate calculation and round answer to 0 decimal places, e.g. 5,275.) Depreciation expense 2020 $enter the Depreciation expense 2020 in dollars rounded to 0 decimal places

Answer 1

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