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 $24,000 $4,000 16 years $60,000 $6,000 6 years Depreciation Method Used Equipment July 1, 2014 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 Undiscounted expected future net cash flows $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. Date Purchased Cost Salvage Useful Life Furniture January 1, 2014 $24,000 $4,000 16 years $60,000 $6,000 6 years Depreciation Method Used Equipment July 1, 2014 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 Undiscounted expected future net cash flows $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
Section: Chapter Questions
Problem 1Q
Related questions
Question
Solve the problem
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
$24,000 $4,000
16 years
$60,000 $6,000
6 years
Depreciation
Method Used
Equipment July 1, 2014
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
Undiscounted expected future net cash flows $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?
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
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education