ABC purchased equipment for its manufacturing plant and furniture for its office building during the fiscal year 2014. Information pertaining to the purchase is detailed below. Salvage Useful Life Depreciation Date Purchased Cost Method Used Furniture January 1, 2014 $24,000 $4,000 16 years $60,000 $6,000 6 years Straight-Line Double-declining Equipment July 1, 2014 balance On December 31, 2015, after recording all depreciation for the year, ABC decides to check both the equipment and furniture for impairment. It computes the following pertinent information: Undiscounted expected future net cash flows Equipment Furniture $30,000 $21,000 Present value of expected future net cash flows $24,500 $18,000 A. What is the amount of impairment loss (if any) to be recorded on the equipment and furniture at December 31, 2015? B. How much depreciation expense should be recorded for the furniture in the fiscal year ended December 31, 2016?
ABC purchased equipment for its manufacturing plant and furniture for its office building during the fiscal year 2014. Information pertaining to the purchase is detailed below. Salvage Useful Life Depreciation Date Purchased Cost Method Used Furniture January 1, 2014 $24,000 $4,000 16 years $60,000 $6,000 6 years Straight-Line Double-declining Equipment July 1, 2014 balance On December 31, 2015, after recording all depreciation for the year, ABC decides to check both the equipment and furniture for impairment. It computes the following pertinent information: Undiscounted expected future net cash flows Equipment Furniture $30,000 $21,000 Present value of expected future net cash flows $24,500 $18,000 A. What is the amount of impairment loss (if any) to be recorded on the equipment and furniture at December 31, 2015? B. How much depreciation expense should be recorded for the furniture in the fiscal year ended December 31, 2016?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:ABC purchased equipment for its manufacturing plant and furniture
for its office building during the fiscal year 2014. Information
pertaining to the purchase is detailed below.
Salvage Useful
Life
Depreciation
Date Purchased
Cost
Method Used
Furniture January 1, 2014
$24,000 $4,000
16 years
$60,000 $6,000
6 years
Straight-Line
Double-declining
Equipment July 1, 2014
balance
On December 31, 2015, after recording all depreciation for the year,
ABC decides to check both the equipment and furniture for
impairment. It computes the following pertinent information:
Undiscounted expected future net cash flows
Equipment Furniture
$30,000 $21,000
Present value of expected future net cash flows $24,500
$18,000
A. What is the amount of impairment loss (if any) to be recorded on
the equipment and furniture at December 31, 2015?
B. How much depreciation expense should be recorded for the
furniture in the fiscal year ended December 31, 2016?
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