MAKINA Company acquired a machine for P6,400,000 on August 31, 2002. The machine has a 5-year life, a P1,000,000 salvage value, and was depreciated using the straight line method. On May 31, 2005, a test for recoverability reveals that the expected net future undiscounted cash inflows related to the continued use and eventual disposal of the machine total P3,000,000. The machine's fair value on May 31, 2005 is P2,700,000 with no residual value. Assuming a loss on impairment is recognized on May 31, 2005, what is MAKINA's depreciation for June 2005? 100,000 111,110 127,040 45,000

MAKINA Company acquired a machine for P6,400,000 on August 31, 2002. The machine has a 5-year life, a P1,000,000 salvage value, and was depreciated using the straight line method. On May 31, 2005, a test for recoverability reveals that the expected net future undiscounted cash inflows related to the continued use and eventual disposal of the machine total P3,000,000. The machine's fair value on May 31, 2005 is P2,700,000 with no residual value. Assuming a loss on impairment is recognized on May 31, 2005, what is MAKINA's depreciation for June 2005? 100,000 111,110 127,040 45,000

Name: MAKINA Company acquired a machine for P6,400,000 on August 31, 2002.
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: MAKINA Company acquired a machine for P6,400,000 on August 31, 2002. The machine has a 5-year life, aP1,000,000 salvage value, and was depreciated using the straight line method. On May 31, 2005, a test forrecoverability reveals that the expected ne

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

A company purchased a new machine on January 1, 2014. The supplier, "Forever supply" was paid $2,000 in cash. In addition, transportation and installation were $180 (paid in cash), legal costs associated with the asset were $20 (paid in cash). The machine has an estimated life of 5 years and an estimated salvage value of $300. It is company policy to use straight line depreciation for all of its machines. question: Assume the machine was sold on July 1, 2015 to "company A" for $1200 cash. Prepare the journal entry/entries to record this transaction. What was the gain/loss? Include the classification of the accounts and clearly label your debits and credits.
Eight years ago, a company purchased an injection molding machine at $40,000. It has been depreciated according to conventional straight-line method (book depreciation) over a 12-year life. The estimated salvage value at the end of 12 years (from the purchase) was $4,000. The machine has a current market value of $15,000. Assume the company purchases a new machine at a cost of $50,000 with a salvage value of $5,000 and a 10 year life. The firm's income tax rate is 40% and their discount rate is 10%. What is the net depreciation tax shield during year three?
A company purchased a Wheel Loader 5 years ago with an initial value of $39,500, a salvage value of $18,500, an annual repair and maintenance cost of $5,000, a storage cost of $7500, a fuel cost of $1250 and estimated life of 10 years. Calculate the machine's book value now (today) using the straight-line, sum-of-years digits, and sinking fund depreciation methods. Assume an interest rate of 2%. Also, answer the following question: 1. Will the three methods give the same results? Why? 2. Which method gives higher book value? 3. How is the book value calculation process different from the ownership?
A machine purchased three years ago for $318,000 has a current book value using straight-line depreciation of $192,000; its operating expenses are $39,000 per year. A replacement machine would cost $227,000, have a useful life of nine years, and would require $10,000 per year in operating expenses. It has an expected salvage value of $71,000 after nine years. The current disposal value of the old machine is $81,000; if it is kept 9 more years, its residual value would be $18,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Total costs Should the old machine be replaced? Purchase New Machine
On January 1, 2007, Flax Co. purchased a machine for 528,000 and depreciated it by the straight-line method using an estimateduseful life of eight years with no salvage value. On January 1, 2010, Flax determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of 48,000. An accounting change was made in 2010 to reflect these additional data. The accumulated depreciation for this machine should have a balance at December 31, 2010 ofa.292,000b.308,000c.320,000d.352,000
The Giovanni Company purchased a tooling machine in 2007 for $120,000. The machine was being depreciated by the straight-line method over an estimated useful life of 20 years, with no salvage value. At the beginning of 2017, after 10 years of use, Giovanni paid $20,000 to overhaul the machine. Because of this improvement, the machine's estimated useful life would be extended an additional 5 years. What would be the depreciation expense recorded for the above machine in 2017? a.$7,333 b.$4,000 c.$6,000 d.$5,333
Alfarabi Company has an asset that had an original cost of $560,000 and depreciation taken to date of $240,000. Management of Alfarabi Company has decided that the asset has suffered an impairment and its expected future net cash flows total $80,000. Further, the asset has a remaining useful life of 3 years and a salvage value of $15,000. No active market exists for the asset and its present value of expected future net cash flows is $61,000. Instructions: a. Prepare the journal entry Alfarabi Company would make to record the impairment in the value of the asset. b. How is the gain or loss on this impairment reported in the income statement?
On January 1, 2016, Rexford Company purchased a drilling machine for $11,500. The machines has an estimated useful life of 4 years and a salvage value of $200. Given this information, if Rexford uses double-declining-balance method of depreciation, and sells the machine on December 31, 2017, for $3,000 cash. Then how much will be gain or loss on disposal of this asset? $ 2,750 loss $ 1,800 loss $1,562 gain $ 125 gain
Martin Corporation acquired a truck on January 1, 2016, at a cost of $84,000. The truck was originally estimated to have a salvage value of $4,000 and an estimated useful life of 8 years. Depreciation had been recorded through December 31, 2018, using the straight-line method. On January 1, 2019, the estimated salvage value was revised to $6,000, and the useful life was revised to a total of 7 years. Required: (Show all calculations) Calculate the annual depreciation expense for the years 2016 through 2018. a. b. Calculate the book value of the truck at December 31, 2018. с. Calculate the depreciation expense per year after revision. d. If the truck is sold at a gain, how is the statement of financial position affected?
Wildhorse Corporation bought a machine on June 1, 2023, for $36,600, f.o.b. the place of manufacture. Freight to the point where it was set up was $240, and $560 was expended to install it. The machine’s useful life was estimated at 10 years, with a salvage value of $2,950. On June 1, 2024, an essential part of the machine is replaced, at a cost of $2,430, with one designed to reduce the cost of operating the machine. The cost of the old part and related depreciation cannot be determined with any accuracy.On June 1, 2027, the company buys a new machine of greater capacity for $41,300, delivered, trading in the old machine which has a fair value and trade-in allowance of $23,600. Preparing the old machine for removal from the plant cost $89, and expenditures to install the new one were $1,770. It is estimated that the new machine has a useful life of 10 years, with a salvage value of $4,720 at the end of that time. (The exchange has commercial substance.)Assuming that depreciation is to…
A laboratory equipment costing ₱146,000 has a projected salvage value of ₱15,000 after 6 years of use. After 3 years of operation, a terrible accident made it a total loss. If a depreciation reserve was maintained in a bank account during its 3 years of operation using the straight line method, how much is in the account at the time of the accident?
ABC Company acquired a machine on January 1, year 2016 for $100,000. The machine is depreciated using the double-declining- balance method, and was estimated to have a 10 year useful life and a salvage value of $10,000. On January 1, year 2018, the company revised its estimations as: a useful life of 5 years beginning from that date, and with a salvage value of $15,000 at the end of 5 years. How much depreciation expense should ABC Company recognize in year 2018? Multiple Choice 13,400 O 21,040 25,600 16,000