A B C D E For Questions 1-3, use the following scenario: Airways Corp plans to buy a new asset for $95,000, and the cost to move it to the airport where it will be used is $5,000. The estimated economic life of the asset is 5 years and managers have estimated the salvage value is $20,000. 1. Calculate depreciation expense and book value for Airways Corp. for the first 3 years. Year Straight-line Double-Declining-Balance Depreciation Book Value at Expense End of Year Depreciation Expense Book Value at End of Year 1 2 3 2. If Airways sells the asset for $50,000 after depreciation expense is recorded for year 2, what is the gain or loss on the sale? Double-Declining Balance Straight-line $ Amount $ Amount (show as (show as positive Indicate if it's a positive Indicate if it's a number) gain or loss number) gain or loss 3. Alternatively, if Airway doesn't sell the asset but discovers that the fair value of the asset is $40,000 at the very beginning of the fourth year, what is the impairment loss recognized? Straight-line Double- Declining Balance
A B C D E For Questions 1-3, use the following scenario: Airways Corp plans to buy a new asset for $95,000, and the cost to move it to the airport where it will be used is $5,000. The estimated economic life of the asset is 5 years and managers have estimated the salvage value is $20,000. 1. Calculate depreciation expense and book value for Airways Corp. for the first 3 years. Year Straight-line Double-Declining-Balance Depreciation Book Value at Expense End of Year Depreciation Expense Book Value at End of Year 1 2 3 2. If Airways sells the asset for $50,000 after depreciation expense is recorded for year 2, what is the gain or loss on the sale? Double-Declining Balance Straight-line $ Amount $ Amount (show as (show as positive Indicate if it's a positive Indicate if it's a number) gain or loss number) gain or loss 3. Alternatively, if Airway doesn't sell the asset but discovers that the fair value of the asset is $40,000 at the very beginning of the fourth year, what is the impairment loss recognized? Straight-line Double- Declining Balance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
am. 105.
Transcribed Image Text:A
B
C
D
E
For Questions 1-3, use the following scenario: Airways Corp plans to buy a new asset for $95,000,
and the cost to move it to the airport where it will be used is $5,000. The estimated economic life of
the asset is 5 years and managers have estimated the salvage value is $20,000.
1. Calculate depreciation expense and book value for Airways Corp. for the first 3 years.
Year
Straight-line
Double-Declining-Balance
Depreciation Book Value at
Expense
End of Year
Depreciation
Expense
Book Value at
End of Year
1
2
3
2. If Airways sells the asset for $50,000 after depreciation expense is recorded for year 2, what is
the gain or loss on the sale?
Double-Declining Balance
Straight-line
$ Amount
$ Amount
(show as
(show as
positive
Indicate if it's a positive
Indicate if it's a
number)
gain or loss
number)
gain or loss
3. Alternatively, if Airway doesn't sell the asset but discovers that the fair value of the asset is
$40,000 at the very beginning of the fourth year, what is the impairment loss recognized?
Straight-line
Double-
Declining
Balance
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