Waterway Industries has equipment with a carrying amount of $2640000. The expected future net cash flows from the equipment are $2675000, and its fair value is $2044000. The equipment is expected to be used in operations in the future. What amount (if any) should Waterway report as an impairment to its equipment? O $631000. O No impairment should be reported. O $596000. O $35000.

Waterway Industries has equipment with a carrying amount of $2640000. The expected future net cash flows from the equipment are $2675000, and its fair value is $2044000. The equipment is expected to be used in operations in the future. What amount (if any) should Waterway report as an impairment to its equipment? O $631000. O No impairment should be reported. O $596000. O $35000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Swifty Corporation has equipment with a carrying amount of $2540000. The expected future net cash flows from the equipment are $2575000, and its fair value is $2049000. The equipment is expected to be used in operations in the future. What amount (if any) should Swifty report as an impairment to its equipment? $35000. $491000. $526000. No impairment should be reported.
Question Content Area Richards, Inc. exchanged a piece of equipment with an original cost of $82,000, accumulated depreciation to date of $40,000, and a fair value of $46,000 for a similar piece of equipment. Cash flows are not expected to change significantly. The newly acquired equipment had a book value of $40,000 and a fair market value of $41,000. At what value should Richard record the newly-acquired equipment? $40,000 $41,000 $46,000 $42,000
8. ABC has determined that one of its cash generating units (CGU) is impaired. The assets of the CGU at their book value are: Land – 4,000,000; Factory – 1,200,000; Machinery and Equipment – 1,800,000. The value in use of the cash generating unit is P5,500,000. The factory’s fair value is P1,000,000. The impairment loss allocated to Machinery and Equipment is? (do not round off the percentage, round off your final answer to the nearest peso)
Case E Robert Sporting Goods Company has another piece of equipment (Q102) with the following cost and accumulated depreciation at its year ended December 31, 2020: Equipment (Q102) $9 000 000 Accumulated Depreciation 3 000 000 Due to obsolescence and physical damage, the equipment was found to be impaired. At the year-end Robert Sporting Goods Company had determined the following information: Fair value less cost of Disposal $4 500 000 Value in use or discounted net cash flows 4 000 000 Undiscounted net cash flows 5 500 000 Required: Assess equipment (Q102) for impairment and prepare the journal entry (if necessary) to report any impairment loss for the year. When selecting from dropdown lists, if a…
Case E Robert Sporting Goods Company has another piece of equipment (Q102) with the following cost and accumulated depreciation at its year ended December 31, 2020: Equipment (Q102) $9 000 000 Accumulated Depreciation 3 000 000 Due to obsolescence and physical damage, the equipment was found to be impaired. At the year-end Robert Sporting Goods Company had determined the following information: Fair value less cost of Disposal $4 500 000 Value in use or discounted net cash flows 4 000 000 Undiscounted net cash flows 5 500 000 Required: Assess equipment (Q102) for impairment and prepare the journal entry (if necessary) to report any impairment loss for the year. When selecting from dropdown lists, if a line item…
(Impairment) The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2017. On December 31, 2017, management projected its future net cash flows from this equipment to be $300,000 and its fair value to be $230,000. The company intends to use this equipment in the future.Instructions(a) Prepare the journal entry (if any) to record the impairment at December 31, 2017.(b) Where should the gain or loss (if any) on the write-down be reported in the income statement?(c) At December 31, 2018, the equipment’s fair value increased to $260,000. Prepare the journal entry (if any) to record this increase in fair value.(d) What accounting issues did management face in accounting for this impairment?
Robert Sporting Goods Company has another piece of equipment (Q102) with the following cost and accumulated depreciation at its year ended December 31, 2020: Equipment (Q102) $9 000 000 Accumulated Depreciation 3 000 000 Due to obsolescence and physical damage, the equipment was found to be impaired. At the year-end Robert Sporting Goods Company had determined the following information: Fair value less cost of Disposal $4 500 000 Value in use or discounted net cash flows 4 000 000 Undiscounted net cash flows 5 500 000 Required: Assess equipment (Q102) for impairment and prepare the journal entry (if necessary) to report any impairment loss for the year. When selecting from dropdown lists, if a line…
Robert Sporting Goods Company has another piece of equipment (Q102) with the following cost and accumulated depreciation at its year ended December 31, 2020: Equipment (Q102) $9 000 000 Accumulated Depreciation 3 000 000 Due to obsolescence and physical damage, the equipment was found to be impaired. At the year-end Robert Sporting Goods Company had determined the following information: Fair value less cost of Disposal $4 500 000 Value in use or discounted net cash flows 4 000 000 Undiscounted net cash flows 5 500 000 Required: Assess equipment (Q102) for impairment and prepare the journal entry (if necessary) to report any impairment loss for the year. When selecting from dropdown lists, if a line…
Asset ImpairmentGreen Light Ltd (GLL) tested a machine for impairment on 31 December 2018. The machine was carried at depreciated historical cost, and its carrying amount was $150,000. It had an estimated remaining useful life of 10 years. GLL's accounting policy required all property, plant and equipment's recoverable amount was determined on the basis of value-in-use calculation, using a discount rate of 15%. The management of GLL estimated the future net cash flows of the machine using reasonable assumptions. The following information related to future net cash flows of the machine was available at the end of 2018. Year Future net cash flow ('000)2019 22,1652020 21,4502021 20,5502022 24,7252023 25,3252024 24,8252025 24,1232026 25,5332027 24,2342028 22,850 Suppose in the years 2019-2021, no event occurred that required the machine's recoverable amount to be re-estimated. On 31 December 2022, costs of $25,000 were incurred to enhance the machine's performance. Revised estimated…
Toro Co. has equipment with a carrying amount of$700,000. The expected future net cash flows from theequipment are $705,000, and its fair value is $590,000.The equipment is expected to be used in operations inthe future. What amount (if any) should Toro report asan impairment to its equipment?
ABC has determined that one of its cash generating units (CGU) is impaired. The assets of the CGU at their book value are: Land – 4,000,000; Factory – 1,200,000; Machinery and Equipment – 1,800,000. The value in use of the cash generating unit is P5,500,000. The impairment loss allocated to Machinery and Equipment is? (do not round off the percentage, round off your final answer to the nearest peso)
12. ABC has determined that one of its cash generating units (CGU) is impaired. The assets of the CGU at their book value are: Goodwill – 250,000; Land – 4,000,000; Factory – 1,200,000; Machinery and Equipment – 1,800,000. The value in use of the cash generating unit is P6,000,000. The impairment loss allocated to factory account assuming the impairment loss specific to machinery and equipment is 300,000 is? (do not round off the percentage, round off your final answer to the nearest peso)