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1.1: (2 pts) Straight-line. 1.2: (3 pts) Sum of the year's digits.

1.1: (2 pts) Straight-line. 1.2: (3 pts) Sum of the year's digits.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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D Problem 1: Depreciation & Impairment (15 pts) Flagg Corp purchase and placed into service $3.3 million worth of virology testing equipment on March 31, 2021. The equipment is expected to last 6 years and/or 2 million batches, and have a salvage value of $600,000. Calculate the depreciation expense for 2021, 2022, and 2023 for the following methods: 1.1: (2 pts) Straight-line. 1.2: (3 pts) Sum of the year's digits. 1.3: (3 pts) Triple times declining balance. 1.4: (3 pts) Units of production (assume 650k, 850k and 600k batches in years 2021, 2022, and 2023). (go out to six decimals on the cost per unit) 1.5: (4 pts) Assume Flagg Corp used the straight-line method. On January 1, 2024, Flagg Corp determined the equipment would generated net free cash flows (undiscounted) of $350,000, $300,000 and $250,000 in each of the next 3 years and nothing thereafter. Further, Flagg Corp uses an internal interest rate of 19%. If necessary, record the impairment journal entry as of January 1. 2024.
Transcribed Image Text:D Problem 1: Depreciation & Impairment (15 pts) Flagg Corp purchase and placed into service $3.3 million worth of virology testing equipment on March 31, 2021. The equipment is expected to last 6 years and/or 2 million batches, and have a salvage value of $600,000. Calculate the depreciation expense for 2021, 2022, and 2023 for the following methods: 1.1: (2 pts) Straight-line. 1.2: (3 pts) Sum of the year's digits. 1.3: (3 pts) Triple times declining balance. 1.4: (3 pts) Units of production (assume 650k, 850k and 600k batches in years 2021, 2022, and 2023). (go out to six decimals on the cost per unit) 1.5: (4 pts) Assume Flagg Corp used the straight-line method. On January 1, 2024, Flagg Corp determined the equipment would generated net free cash flows (undiscounted) of $350,000, $300,000 and $250,000 in each of the next 3 years and nothing thereafter. Further, Flagg Corp uses an internal interest rate of 19%. If necessary, record the impairment journal entry as of January 1. 2024.
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