ABC purchased equipment for its manufacturing plant and furniturefor its office building during the fiscal year 2014. Informationpertaining to the purchase is detailed below.Date PurchasedCostSalvage UsefulLifeFurniture January 1, 2014Equipment July 1, 2014$24,000 $4,000$60,000 $6,000 6 years16 yearsDepreciationMethod UsedStraight-LineDouble-decliningbalanceOn December 31, 2015, after recording all depreciation for the year,ABC decides to check both the equipment and furniture forimpairment. It computes the following pertinent information:Equipment FurnitureUndiscounted expected future net cash flows $30,000 $21,000Present value of expected future net cash flows $24,500$18,000A. What is the amount of impairment loss (if any) to be recorded onthe equipment and furniture at December 31, 2015?B. How much depreciation expense should be recorded for thefurniture in the fiscal year ended December 31, 2016?

Explanation of Impairment Loss:To determine the impairment loss, compare the carrying amount of each…

Answered: ABC purchased equipment for its…

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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On January 1, 2017 the Ivanhoe company records show equipment 38000 and accumulated depreciation 13840. The depreciation resulted from using The straight line method with our useful life of 10 years and a salvage value of 3400. On this date the company concludes that the equipment has are remaining useful life of only 4 years with the same salvage value. Calculate the revised annual depreciation.
The Reed Company uses the straight-line method to depreciate its equipment. On June 1, 2007, the company purchased some equipment for $200,000. The equipment is estimated to have a useful life of eight years and a salvage value of $20,000. How much depreciation expense should Reed record for the equipment in the adjusting entry on December 31, 2007? a. $6,000 b. $12,000 c. $13,125 d. $18,000
Equipment acquired on October 1, 2014, at a cost of $540,000 has an estimated useful life of 10 years. The residual value is estimated to be $55,000 at the end of the equipment's useful life. The company has a December 31 year end. Instructions Calculate the depreciation expense for December 31, 2014 and 2015 using: the straight-line method. b. the double diminishing-balance method.
SEAT Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $16,200 $503,700 Building, estimated service life, 30 years; no salvage value $648,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the journal entry to record depreciation expense for the equipment in 2018. (b) Prepare the journal entry to record depreciation expense for the building in 2018.
abc company purchased an equipment on september 1, 2015 for $230000. the salvage value of the equipment is $10000 and the estimated useful life is 10 years. what is the book value of the equipment at december 31 2016, if the company uses sum of years digits method to record depreciation
Dog
On April 1, 2016, Cyclone's Backhoe Co. purchases a trencher for $288,000. The machine is expected to last five years and have a salvage value of $44,000. Compute depreciation expense for both years ending December 2016 and 2017 assuming the company uses the straight-line method.
Equipment was purchased for $120,000 on March 1, 2016. Its estimated useful life is eight years with a $12,000 expected salvage value. Using double-declining balance depreciation, the 2017 depreciation expense is: A) $22,500 B) $27,000 C) $23,750
On January 1, 2010, Graham Company purchased a new machine for $2,100,000. The new machine has an estimated useful life of nine years and the residual value was estimated to be $75,000. Depreciation was computed on the sum-of-the-years'-digits method. What amount should be shown in Graham's balance sheet at December 31, 2011, net of accumulated depreciation, for this machine? OA. $1,244,250 OB. $1,695,000 OC $1,335,000 OD. $1,306,666
Buffalo Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $13,700 $523,700 Building, estimated service life, 30 years; no salvage value $678,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the general journal entry to record depreciation expense for the equipment in 2021. (b) Prepare the journal entry to record depreciation expense for the building in 2021. (Round answers to 0 decimal places,…
Lockard Company purchased machinery on January 1, 2017, for $80,000. The machinery is estimated to have a salvage value of $8,000 after a useful life of 8 years. (a) Compute 2017 depreciation expense using the sum-of-the-years’-digits method. (b) Compute 2017 depreciation expense using the sum-of-the-years’-digits method, assuming the machinery was purchased on April 1, 2017.
On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $204,000 and has accumulated depreciation of $183,600. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to record the disposal? a.Gain on Disposal of Asset, credit, $20,400 b.Equipment, credit, $204,000 c.Loss on Disposal of Asset, debit, $183,600 d.Accumulated Depreciation, debit, $204,000

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