
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
- Assume that Carleton reported the following information regarding a machine at December 31, 2019:
Cost |
$60,000 |
|
30,000 |
Expected future net |
26,000 |
Fair value 24,000
Assuming that Carleton will continue to use this asset in the future and the machine has a remaining useful life of 4 years.
Instructions
- Prepare the
journal entry (if any) to record the impairment of the asset on December 31, 2019. Besides, prepare the journal entry to record depreciation expenses for 2020. - Assuming that Carleton intends to dispose of the machine in the coming year. It is expected that the cost of disposal will be $1,000. However, the machine was not sold by December 31, 2020. The fair value of the machine on that date is $26,800. Prepare the journal entry (if any) necessary to record this increase in fair value.
- Assume that Carleton has a crane which has an original cost of $150,000, an estimated salvage value of $ 25,000, and useful life of 5 years. Carleton uses sum-of-the-year’s digit method to record depreciation for cranes. Now calculate depreciation for the crane for 2019, assuming that it was purchased on May 1, 2017.
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