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. Date Purchased Cost Salvage Useful Life Furniture January 1, 2014 Equipment July 1, 2014 $24,000 $4,000 $60,000 $6,000 6 years 16 years Depreciation Method Used Straight-Line Double-declining 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: Equipment Furniture $18,000 Undiscounted expected future net cash flows $30,000 $21,000 Present value of expected future net cash flows $24,500 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. Date Purchased Cost Salvage Useful Life Furniture January 1, 2014 Equipment July 1, 2014 $24,000 $4,000 $60,000 $6,000 6 years 16 years Depreciation Method Used Straight-Line Double-declining 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: Equipment Furniture $18,000 Undiscounted expected future net cash flows $30,000 $21,000 Present value of expected future net cash flows $24,500 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?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.6E
Related questions
Question
Please provide Solutions in Text Format
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.
Date Purchased
Cost
Salvage Useful
Life
Furniture January 1, 2014
Equipment July 1, 2014
$24,000 $4,000
$60,000 $6,000 6 years
16 years
Depreciation
Method Used
Straight-Line
Double-declining
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:
Equipment Furniture
$18,000
Undiscounted expected future net cash flows $30,000 $21,000
Present value of expected future net cash flows $24,500
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?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning