Pearson eText Intermediate Accounting -- Instant Access (Pearson+)
3rd Edition
ISBN: 9780136946649
Author: Elizabeth Gordon, Jana Raedy
Publisher: PEARSON+
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 12, Problem 12.17BE
To determine
To prepare: Footnote disclosure on the loss of impairment.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Hhi. What is the answr/solution to this problem?
Depreciation by Two Methods; Sale of Fixed Asset
New lithographic equipment, acquired at a cost of $843,750 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $72,600. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year.
On March 4 of Year 5, the equipment was sold for $123,600.
Required:
1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods:
a. Straight-line method
Year
DepreciationExpense
Accumulated Depreciation,End of Year
Book Value,End of Year
1
$fill in the blank d67bc401dff703b_1
$fill in the blank d67bc401dff703b_2
$fill in the blank d67bc401dff703b_3
2
$fill in the blank…
Required information
[The following information applies to the questions displayed below.]
On April 1, Cyclone Company purchases a trencher for $294,000. The machine is expected to last five years and have a
salvage value of $47,000.
Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the straight-line
method.
Choose Numerator:
Year
First year
Second year
Annual Depreciation x
Choose Denominator:
Fraction of Year
11
11
11
11
11
Annual Depreciation
Annual depreciation
Depreciation Expense
Jethro Inc. is reviewing its intangible assets for impairment. The accounting team has received the
following information on the assets' book value, annual cash flows and fair values:
Asset
Carrying value
Estimated selling
Remaining
useful life
Annual expected
cash flows
price
Patent #1
$80,000
$8,000
$70,000
8 years
15 years
Patent #2
$180,000
$15,000
$175,000
License
$50,000
Indefinite
$ 2,000
$35,000
Selling costs of any intangible asset is expected to be negligible. The company's internal rate of return
(IRR) is 5%
Required: Test each of the intangible assets for impairment. If the asset is impaired, record impairment.
(a) Assuming the company uses ASPE's cost recovery impairment model; and
(b) Assuming the company uses IFRS's rational entity impairment model (for the PV of an asset with
unlimited life, set n to a very large value like 1000 or the highest value on the annuity table)
Chapter 12 Solutions
Pearson eText Intermediate Accounting -- Instant Access (Pearson+)
Ch. 12 - Prob. 12.1QCh. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.1MCCh. 12 - Prob. 12.2MCCh. 12 - Prob. 12.3MCCh. 12 - Prob. 12.4MCCh. 12 - Prob. 12.5MCCh. 12 - Prob. 12.6MCCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Indefinite-Life Intangible Asset Impairment....Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.21BECh. 12 - Prob. 12.22BECh. 12 - Prob. 12.23BECh. 12 - Tangible Asset Impairment. Henne Optical...Ch. 12 - Tangible Asset Impairment Loss. Use the same...Ch. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Tangible Asset Impairment Loss, IFRS. Use the same...Ch. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Assets Held for Disposal. Hattie Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Asset Revaluation, Downwards, IFRS. Lousa Company...Ch. 12 - Tangible Asset Impairment. Chrispian Cookies, Inc....Ch. 12 - Prob. 12.2PCh. 12 - Tangible Asset Impairment. Using the same...Ch. 12 - Prob. 12.4PCh. 12 - Goodwill Impairment, Tangible Fixed Assets, and...Ch. 12 - Tangible Asset Impairment, Potential Reversal,...Ch. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Comprehensive Asset Revaluation Problem (Initial...Ch. 12 - Prob. 12.11PCh. 12 - Judgment Case 1: Impairments of PPE under IFRS...Ch. 12 - Prob. 2JCCh. 12 - Prob. 3JCCh. 12 - Financial Statement Analysis Case 1: Long-Lived...Ch. 12 - Surfing the Standards Case 1: Impairments of PPE...Ch. 12 - Prob. 2SSCCh. 12 - Prob. 1BCCCh. 12 - Basis for Conclusions Case 2: Intangible Assets ...Ch. 12 - Basis for Conclusions Case 3: Goodwill Impairment...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- What is the solution and/or answer to this problem? Depreciation by Two Methods; Sale of Fixed Asset New lithographic equipment, acquired at a cost of $718,750 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $61,800. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $105,300. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Year DepreciationExpense Accumulated Depreciation,End of Year Book Value,End of Year 1 $fill in the blank ae7e56f7b05f016_1 $fill in the blank ae7e56f7b05f016_2 $fill in the blank ae7e56f7b05f016_3 2 $fill in the blank…arrow_forwardH1.arrow_forwardHi what is the solution to this problem? please 2. PR.10-04.ALGO Depreciation by Two Methods; Sale of Fixed Asset New lithographic equipment, acquired at a cost of $843,750 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $72,600. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $123,600. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Year DepreciationExpense Accumulated Depreciation,End of Year Book Value,End of Year 1 $fill in the blank 7576dbf1f067fc1_1 $fill in the blank 7576dbf1f067fc1_2 $fill in the blank 7576dbf1f067fc1_3 2 $fill in the…arrow_forward
- . A piece of earth-moving equipment was purchased at a cash price of P25,000. The life of this equipment was estimated at 6 years with no salvage value. However, at the end of 4 years, the machine had become so inefficient, because of waring of parts, that was replaced. Depreciation was allowed on the company books by the sinking fund method with a 4% interest. Determine the annual depreciation. Round off final answer to the nearest hundredths with complete solutionarrow_forwardA commercial generator with an unadjusted basis of $50,000 is straight-line depreciated over a 5-year period. The asset will have an AOC of $35,000 and a salvage value of $10,000. The book value at the end of year 3 will be closest to: (a) $8000 (b) $20,000 (c) $24,000 (d) $26,000arrow_forwardA new machine tool is being purchased for $260,000 and is expected to have a $36,000 salvage value at the end of its 5-year useful life. Assume any remaining depreciation is claimed in the last year. Compute the depreciation schedules for this capital asset, using the following methods: (a) Straight-line depreciation (b) MACRS Note: No statement is required for this problem.arrow_forward
- Subject: acountingarrow_forwardPlease help mearrow_forwardAssume that Hospital X purchased equipment for $600,000 cash on April 1st (the first day of its fiscal year). This equipment has an expected life of 10 years. The salvage value is 10 percent of cost. No equipment was traded in on this purchase. 1. Compute the straight-line depreciation for this purchase. 2. Compute the double declining balance depreciation for this purchase.arrow_forward
- 1. The company purchased the equipment on October 1, 20X1 for $100,000, and estimated that the equipment will use for 5 years and has a residual value of $2,000. The equipment has the following capacity: 10,000 service hours. December 31 is the reporting date. The equipment provided 600 and 2,200 service hours in 20X1 and 20X2, respectively. Required Calculate depreciation expense for 20X1 and 20X2 using different methods in the following table Straight-line Double-declining-balance Activity method For 20X1, 20X2 2. The company provided the data of PP&E in a cash-generating unit (CGU) as follows: Cost Acmulated Depreciation Equipmnt 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. Required (1) Prepare journal entries to record impairment.…arrow_forwardPlease refer to the picture below. Show the complete solution. Thank you.arrow_forwardRedtail 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?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License
Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY