. Last year, Wyeth Company recorded an impairment on an asset held for use. Recent appraisals indicate that the asset has increased in value. Should Wyeth record this recovery in value under GAAP?
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. Last year, Wyeth Company recorded an impairment on an asset held for use. Recent appraisals indicate that the asset has increased in value. Should Wyeth record this recovery in value under GAAP?
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- Under U.S. GAAP, in a year in which the fair value of an asset rises, should a company record depreciation expense for that asset? Why?Last year, Wyeth Company recorded an impairment on an asset held for use. Recent appraisals indicate that the asset has increased in value. Should Wyeth record this recovery in value?At the beginning of its fiscal year, Koeplin Corporation purchased a machine for $50,000. At the end of the year, the machine had a fair value of $32,000. Koeplin’s controller recorded depreciation of $18,000 for the year, the decline in the machine’s value. Why is this an incorrect approach to measuring periodic depreciation?
- After recording depreciation for the current year, Media Mania Incorporated decided to discontinue using its printing equipment. The equipment had cost $748,000, accumulated depreciation was $547,000, and its fair value (based on estimated future cash flows from selling the equipment) was $48,000. Determine whether the equipment is impaired. Prepare the journal entries to record the impairment in asset if any. Fill in the blank : The fair value is ________ and the book value is ___________ , therefore this asset (is/is not) impaired Record journal entry to remove accumulated depreciation Record journal entry for the impairment lossAn annual report of Costco Wholesale Corporation, the large discount company, contained the following statement:“The Company periodically evaluates long-lived assets for impairment when circumstances occur that may indicate the carrying amount of the asset group may not be fully recoverable”. (a) What does the concept of impairment mean in accounting?At the beginning of its fiscal year, Koeplin Corporation purchased equipment for $50,000. At the end of the year, the equipment had a fair value of $32,000. Koeplin’s controller recorded depreciation of $18,000 for the year, the decline in the equipment’s value. Is this the correct approach to measuring periodic depreciation (yes/no)? Discuss.
- An annual report of Costco Wholesale Corporation, the large discount company, contained the following statement:“The Company periodically evaluates long-lived assets for impairment when circumstances occur that may indicate the carrying amount of the asset group may not be fully recoverable”. What effect does impairment have on profitability and cash flows?Blackpink has sold during the year a depreciable asset that cost P11,250 and had a carrying amount of P2,400 with a P3,600 selling price. The disposal was correctly recorded. Here are the balances of the accumulated depreciation during the year: Jan 1- P127,800 and Dec 31 - P133,050. What will be the amount of the adjusting entry for depreciation expense during the year-end?An annual report of Costco Wholesale Corporation, the large discount company, contained the following statement:“The Company periodically evaluates long-lived assets for impairment when circumstances occur that may indicate the carrying amount of the asset group may not be fully recoverable”. Why would the concept of impairment be referred to as a conservative accounting approach?
- Indicate whether each of the following statements is true or false. The major objection to the straight-line method is that it assumes the asset’s economic usefulness and repair expense are the same each year. Answer The sum-of-the-years’-digits method does not deduct the residual value in computing the depreciation base. Answer IFRS allows only the cost and fair-value models to be applied to the measurement of property, plant and equipment.IFRS requires annual reviews of long-lived assets (other than goodwill) for reversal indicators. A loss may be reversed up to the newly estimated recoverable amount, not to exceed the initial carrying amount adjusted for depreciation. This is a significant departure from GAAP, so what are the financial statement implications? Is it a good thing or bad?Marigold Corp. applies revaluation accounting to plant assets with a carrying value of $1650000, a useful life of 4 years, and no salvage value. Depreciation is calculated on the straight-line basis. At the end of year 1, independent appraisers determine that the asset has a fair value of $1570000.The entry to record depreciation for this same asset in year two will include a debit to Accumulated Depreciation for $412500. debit to Depreciation Expense for $412500. debit to Depreciation Expense for $523333. credit to Accumulated Depreciation for $332500.