olant assets below: Cost: $850,000. Annual depreciation expense: $50,000. \ccumulated depreciation expense: $200,000. Required: Compute the analytical measures of plant age for Autry Company .What information is useful to determine an estimated point of plant asset of future cash flows?

olant assets below: Cost: $850,000. Annual depreciation expense: $50,000. \ccumulated depreciation expense: $200,000. Required: Compute the analytical measures of plant age for Autry Company .What information is useful to determine an estimated point of plant asset of future cash flows?

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter12: The Statement Of Cash Flows

Section: Chapter Questions

Problem 12.23MCE

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Assume San Lucas Corporation in MAD 26-1 assigns the following probabilities to the estimated annual net cash flows: a. Compute the expected value of the annual net cash flows. b. Determine the expected net present value of the equipment, assuming a desired rate of return of 10% and the expected annual net cash flows computed in part (a). Use the present value tables (Exhibits 2 and 5) provided in the chapter in determining your answer. c. Based on your results in parts (a) and (b), should San Lucas Corporation invest in the equipment?
Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.
Georgia Peach has the following information regarding the sale of its equipment: Sales price $8,000 Cost $25,000 Accumulated depreciation $19,000 Which of the following statements is true regarding how the above information would be reported on Georgia's statement of cash flows? Group of answer choices Loss on sale of plant asset will be $17,000 Gain on sale of plant asset will be $2,000 Depreciation expense will be $19,000 Cash received from sale of plant asset will be $25,000
Using the following information, compute cash paid to purchase property, plant, and equipment. Depreciation expense ................................ .....................................$13，000 End of Year Begnning of Year Property，plant and Equipment.... .............. $ 134,000 $ 124,000 Accumulated depreciation ................................ 32,000 41,000 During the year, property, plant, and equipment with an original cost of $28,000 was sold for a gain of $6,500. Compute the amount of cash received from the sale of the property, plant, and equipment.
The company provided the data of PP&E in a cash-generating unit (CGU) as follows: Cost Accumulated Depreciation Equipment A $ 15,000 $ 8,000 Equipment B 30,000 19,000 Equipment C 45,000 23,000 The unit’s fair value less costs to sell was $25,000. The unit’s future cash flows was $32,000, and its present value was $28,000. The company adopted IFRS. Prepare journal entries to record impairment. If the recoverable amount of Equipment C is $19,000, prepare journal entries to record impairment. If the recoverable amount of Equipment C is $24,000, prepare journal entries to record impairment.
Lovell Company reported the following information related to its long-term assets: Property, plant, and equipment, beginning balance $230,000 Property, plant, and equipment, ending balance 260,000 Accumulated depreciation, beginning balance 81,000 Accumulated depreciation, ending balance 79,000 Depreciation expense 9,500 In addition, the company disclosed that it sold equipment with a historical cost of $25,000 for $21,000. Using this information, compute cash paid for property, plant, and equipment.
An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000 and it has an estimated MV of $12,000 at the end of an estimated useful life of 14 years. Compute the accumulated depreciation in the third year and the BV at the end of 5th year of life by each of these methods at the rate of 9%: b. The DB Method (Declining Balance Method)- Provide the complete solution and cash flow diagram
In 2018, Batman Company ( an IFRS reporter) acquired equipment at a cost of $620,000. The balance of accumulated depreciation is $340,000. The sum of the discounted future cash flows expected from the use of this asset is $290,000 and the asset's current fair value is $250,000 before considering costs of disposal of $5,000. What is the recoverable amount?
The Crystal Company uses straight-line depreciation and is considering a capital expenditure for which the following relevant cash flow data have been estimated: Estimated useful life: 3 years Initial investment: $400,000 Savings year 1: $160,000 Savings year 2: $150,000 Savings year 3: $90,000 Residual value after 3 yrs $30,000 The accounting rate of return is closest to 37.50%. 15.00%. 0.53%. 2.50%.
Could someone please help fill out this problem for my study guide. At December 31, 2022, Windsor, Inc. reported the following plant assets. Land $ 3,870,000 Buildings $27,080,000 Less: Accumulated depreciation—buildings 12,186,000 14,894,000 Equipment 48,520,000 Less: Accumulated depreciation—equipment 6,065,000 42,455,000 Total plant assets $61,219,000 During 2023, the following selected cash transactions occurred. April 1 Purchased land for $2,140,000. May 1 Sold equipment that cost $930,000 when purchased on January 1, 2016. The equipment was sold for $279,000. June 1 Sold land for $1,590,000. The land cost $1,002,000. July 1 Purchased equipment for $1,102,000. Dec. 31 Retired equipment that cost $717,000 when purchased on December 31, 2013. No salvage value was received. Journalize the transactions. (Hint: You may wish to set up T-accounts, post beginning balances, and then post…
Redtail Hawk Company is evaluating two possible investments in depreciable plant assets. The company uses the straight−line method of depreciation. The following information is available: Investment A Investment B Initial capital investment $17,500 $455,000 Estimated useful life 8 years 8 years Estimated residual value $8,000 $15,000 Estimated annual net cash inflow $7,000 $70,000 Required rate of return 11% 12% How long is the payback period for Investment A?
An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000 and it has an estimated MV of $12,000 at the end of an estimated useful life of 14 years. Compute the accumulated depreciation in the third year and the BV at the end of 5th year of life by each of these methods at the rate of 9%: b. The DB Method (Declining Balance Method)- Provide the complete manual solution (not excel or tables) and cash flow diagram