8. On January 2, 2018, Q. Tong Inc. purchased equipment with a cost of $10,440,000, a useful life of 10 years and $40,000 salvage value. The Company uses sum-of-year digits depreciation. At December 31, 2018 and December 31, 2019, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end: 12/31/2018 $9,315,000 $9,350,000 12/31/2019 $6,500,000 $6,215,000 Fair value less cost to sell Value-in-use There is no change in the asset's useful life or salvage value. The 2019 income statement will report: A. Impairment Loss of $347,273. B. Impairment Loss of HK$10,000. C. Recovery of Impairment Loss of $347,273. D. Recovery of Impairment Loss of HK$1,000,000. Use the following information for questions 9-10. A company uses the retail inventory method. The following information is available for the
8. On January 2, 2018, Q. Tong Inc. purchased equipment with a cost of $10,440,000, a useful life of 10 years and $40,000 salvage value. The Company uses sum-of-year digits depreciation. At December 31, 2018 and December 31, 2019, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end: 12/31/2018 $9,315,000 $9,350,000 12/31/2019 $6,500,000 $6,215,000 Fair value less cost to sell Value-in-use There is no change in the asset's useful life or salvage value. The 2019 income statement will report: A. Impairment Loss of $347,273. B. Impairment Loss of HK$10,000. C. Recovery of Impairment Loss of $347,273. D. Recovery of Impairment Loss of HK$1,000,000. Use the following information for questions 9-10. A company uses the retail inventory method. The following information is available for the
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 8P: At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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