Question 3:Amison Corp. purchased land and a building on May 1, 2021 for $ 385,000. The company paid $115,000 in cash and signed a 5% note payable for the balance. The note is due on February 1,2023. At that time, Arnison estimated that the land was worth $ 150,000 and the building S235,000. The building was estimated to have a 25-year useful life with a $ 35,000 residual value,The company has a December 31 year end and uses the single declining balance depreciation.The following are related transactions and adjustments during the next three years:2021:Dec. 312022:Feb. 17Dec. 312023:Jan. 31Feb. 1Record the annual depreciation.Paid the interest owning on the notes payable.Paid $ 225 to have the furnace cleaned and serviced.Recorded the annual depreciation.Paid the interest owing on the note payable.The land and building were tested for impairment. The land had a net realizablevalue amount of $ 120,000 and the value in use of $ 110,000. The building has anet realizable value of $ 220,000 and a value in use of $ 240,000.Sold the land and building for $ 320,000 cash $ 110,000 for the land and S210,000 for the building.Paid the note payable and interest owing.Required:1. Record the above transactions and adjustments.2. What factors may have been responsible for the impairment.

Impairment losses describe a decrease in an asset's value brought on by a decrease in its utility or…

Answered: Feb. 1 Paid the note payable and…

Feb. 1 Paid the note payable and interest owing. Required: 1. Record the above transactions and adjustments. 2. What factors may have been responsible for the impairment.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter17: Business Tax Credits And The Alternative Minimum Tax

Section: Chapter Questions

Problem 11P

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