Impairment Amando Bacot purchases equipment for $10,000 on January 1, 2022. The equipment has a residual value of $1,000 and a 9 year useful life. Bacot uses straight line depreciation. On December 31, 2023 Bacot determines that the equipment may be impaired as the demand for the product it produces has decreased. The expected net cash flows from the equipment are $500 per year for each of the next 7 years (assume cash flows occur at the end of each year). If I assume an effective interest rate of 10 percent, what impairment if any, does Bacot record on December 31, 2023? What depreciation expense does Bacot record in 2024? NC STATE UNIVERSITY

Impairment Amando Bacot purchases equipment for $10,000 on January 1, 2022. The equipment has a residual value of $1,000 and a 9 year useful life. Bacot uses straight line depreciation. On December 31, 2023 Bacot determines that the equipment may be impaired as the demand for the product it produces has decreased. The expected net cash flows from the equipment are $500 per year for each of the next 7 years (assume cash flows occur at the end of each year). If I assume an effective interest rate of 10 percent, what impairment if any, does Bacot record on December 31, 2023? What depreciation expense does Bacot record in 2024? NC STATE UNIVERSITY

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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Depreciation and Rate of Return Burrell Company purchased a machine for $31,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $15,500 each year. The tax rate is 20%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset. Straight-line method. If required, round to one decimal place. 2019 26.7 % 2020 34.3 % 2021 48 % 2022 80 % 2023 240 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 10 % 2020 43.33 % 2021 98.89 % 2022 191.49 % 2023 350 X %
Depreciation and Rate of Return Burrell Company purchased a machine for $20,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $10,000 each year. The tax rate is 21%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset. Straight-line method. If required, round to one decimal place. 2019 fill in the blank 1 % 2020 fill in the blank 2 % 2021 fill in the blank 3 % 2022 fill in the blank 4 % 2023 fill in the blank 5 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 fill in the blank 6 % 2020 fill in the blank 7 % 2021 fill in the blank 8…
Revision of Depreciation On January 1, 2021, Blizzards-R-Us purchased a snow-blowing machine for $85,000. The machine was expected to have a residual value of $5,000 at the end of its 5-year useful life. On January 1, 2023, Blizzards-R-Us concluded that the machine would have a remaining useful life of 6 years with a residual value of $770. Required: Determine the revised annual depreciation expense for 2023 using the straight-line method.
Depreciation for Partial Periods Storm Delivery Company purchased a new delivery truck for $45,000 on April 1, 2019. The truck is expected to have a service life of 10 years or 90,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019 and 14,000 miles in 2020. Storm computes depreciation expense to the nearest whole month. Required: Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $ fill in the blank 1 2020 $ fill in the blank 2 Sum-of-the-years'-digits method 2019 $ fill in the blank 3 2020 $ fill in the blank 4 Double-declining-balance method 2019 $ fill in the blank 5 2020 $ fill in the blank 6 Activity method 2019 $ fill in the blank 7 2020 $ fill in the blank 8 For each method, what is the book value of the machine at the end of 2019? At the end of 2020? (Round your answers to the nearest dollar.) Straight-line method…
• Exel purchased equipment for $100,000 on January 1st, 2020. The equipment will last for 4 years with no salvage value and will be depreciated straight line. On January 1st, 2022, Exel determined the equipment should be revalued +5%, according to IFRS. Depreciation Expense for December 31st, 2022 will be : O $26,250. O $12,000. O $18,000. O $22,000.
Original Cost POST. ... Accumulated Depreciation for Previous Years DATE DESCRIPTION REF. DEBIT CREDIT ... Book Value, Beginning Year 4 1 20xx ... Revised Salvage Value 2 2. ... Revised Remaining Depreciation Cost 3 ... 4 Revised Useful Life 3 Years Revised Depreciation, Total Revised Depreciation, Per Year ...
Depletion On January 2, 2019, Whistler Company purchased land for $530,000, from which it is estimated that 360,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $68,000, after which it could be sold for $31,000. During 2019, Whistler mined 73,000 tons and sold 62,000 tons. During 2020, Whistler mined 93,000 tons and sold 89,000 tons. At the beginning of 2021, Whistler spent an additional $110,000, which increased the reserves by 60,000 tons. In 2021, Whistler mined 132,000 tons and sold 137,000 tons. Whistler uses a FIFO cost flow assumption. Required: If required, round the depletion rate to the nearest cent and round the final answers to the nearest dollar. 1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021. 2019 Depletion deducted from income $ Depletion included in inventory $4 2020 Depletion deducted from income $ Depletion included in inventory $4 2021…
Depletion On January 2, 2019, Whistler Company purchased land for $430,000, from which it is estimated that 350,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $74,000, after which it could be sold for $28,000. During 2019, Whistler mined 79,000 tons and sold 63,000 tons. During 2020, Whistler mined 97,000 tons and sold 95,000 tons. At the beginning of 2021, Whistler spent an additional $90,000, which increased the reserves by 53,000 tons. In 2021, Whistler mined 144,000 tons and sold 134,000 tons. Whistler uses a FIFO cost flow assumption. Required: If required, round the depletion rate to the nearest cent and round the final answers to the nearest dollar. 1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021. 2019 Depletion deducted from income Depletion included in inventory $ 2020 Depletion deducted from income Depletion included in inventory $ 2021 Depletion…