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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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