In January 2018, Wine Company purchased equipment at a cost on P2,500,000. The equipment has a residual value of P500,000, a useful life of 8 years and is depreciated by the straight line method. Two years later, it became apparent that this equipment suffered permanent impairment in value. In January 2020, management determined the recoverable amount of the equipment to be only P875,000 with a 2-year remaining useful life and residual value of P125,000.

In January 2018, Wine Company purchased equipment at a cost on P2,500,000. The equipment has a residual value of P500,000, a useful life of 8 years and is depreciated by the straight line method. Two years later, it became apparent that this equipment suffered permanent impairment in value. In January 2020, management determined the recoverable amount of the equipment to be only P875,000 with a 2-year remaining useful life and residual value of P125,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Calculate total accumulated depreciation of each asset until the sold date .
3) Which of the following best describes a depreciation base?7) The acquisition cost of an asset relative to its fair value O The estimated market value of an asset at the end of its useful life O The historical cost of an asset less the depreciation recognized to date O The amount that should be expensed over an asset's useful life
The intangible assets and goodwill reported by Sunland Corporation at December 31, 2020, follow: Copyrights (#1) $36,120 Less: Accumulated amortization $ 18,060 18,060 Trademarks 53,130 Goodwill 124,750 Total $195,940 A copyright (#1) was acquired on January 1, 2019, and has a useful life of four years. The trademarks were acquired on January 1, 2017, and are expected to have an indefinite life. The company has a December 31 year end and prepares adjusting journal entries annually. The following cash transactions may have affected intangible assets and goodwill during 2021: Jan. Paid $6,690 in legal costs to successfully defend the trademarks against infringement by another company. July Developed a new product, incurring $193,940 in research and $48,300 in development costs with probable future benefits. The product is expected to have a useful life of 21 years. Sept. Paid $59,790 to a popular hockey player to appear in commercials advertising the company's products. The commercials…
1. What amount should be recorded initially as cost of the right of use asset? 2. What is the annual depreciation of the right of use asset?
Required information [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Date Placed in Asset Cost Service $ 360,000 1,602,000 82,000 Office furniture Machinery Used delivery truck* *Not considered a luxury automobile. 02/03/2020 07/22/2020 08/17/2020 During 2020, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Date Placed in Asset Cost Service Computers and information system Luxury autot Assembly equipment Storage building $ 442,000 90,500 1,410,000 03/31/2021 05/26/2021 08/15/2021 11/13/2021 700,000 tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1,785,000 for purposes…
Choose the appropriate definition for each term. Term Amortization Useful life Licensing right Least and latest rule Component allocation Fixed asset turnover ratio Depreciable cost Copyright Depreciation schedule Revenue expenditures 2 Definition
Name depreciation methods that deduct residual value before an asset is depreciated.
Property Plant Equipment will be classified at year end at what amount? "Apply PAS 36" Historical Cost Cost Lower of Cost or Net Realizable Value Carrying Value
How would accumulated depreciation be classified on the balance sheet? current asset fixed asset current liability O long term liability
Which depreciation method ignores residual value when computing the depreciable base of an asset? a. sum-of-the-year's-digits b. double-declining-balance c. composite depreciation d. group depreciation
Depreciation expense under the invenroty system is a. Based on cost minus residual value b. Basically a FIFO approach to depreciable asset accounting c. The result of applying a depreciation rate to the original cost d. A measure of the change in the value of the depreciable asset
Prepare the complete Depreciation and Amortisation Form 4562.