On Jan 1, 2023, GM purchased the following assets. Details for setting up depreciation schedules are summarized below: Assets Acquisition Cost Residual Method Useful life Truck Warehouse Straight-line Sum-of-the years'- digits Double-declining Unit-of production Factory Machinery Machinery's estimated total production capacity is 50,000 units of cars. During 2023, GM produced a total of 10,000 units using the Machinery. On Dec 31, 2023, sudden changes in the operational and market conditions indicate that the sum of undiscounted future cash flows from the factory is now estimated at $1,800,000. The fair value of the Factory as of the date is $1,500,000. After recognizing depreciation expense for 2023 as scheduled, GM wrote-off the factory. The remaining service life is reduced to additional 5 years and the residual value is updated to $150,000. Depreciation for the factory using these new parameters will start from 2024 with the double-declining method. During 2024, GM produced a total of 15,000 units using the Machinery. What is the total amount of depreciation expense GM will recognize at the end of 2023? 1/1/2023 V/1/2023 C 1/1/2023 1/1/2023 Multiple Choice $1,290,000 $1,158,182 $1,165,000 $1,920,000 500,000 100,000 2,000,000 800,000 10 10 3,000,000 700,000 2,000,000 500,000 10 10

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Chapter1: Financial Statements And Business Decisions
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On Jan 1, 2023, GM purchased the following assets. Details for setting up depreciation schedules are summarized below:
Assets
Acquisition Cost
Residual
Method
Useful life
Truck
1/1/2023
Warehouse 1/1/2023
Multiple Choice
O
1/1/2023
1/1/2023
O
O
3,000,000
700,000
Factory
Machinery
2,000,000 500,000 Unit-of production
Machinery's estimated total production capacity is 50,000 units of cars. During 2023, GM produced a total of 10,000 units using the Machinery.
On Dec 31, 2023, sudden changes in the operational and market conditions indicate that the sum of undiscounted future cash flows from the factory is
now estimated at $1,800,000. The fair value of the Factory as of the date is $1,500,000. After recognizing depreciation expense for 2023 as scheduled,
GM wrote-off the factory. The remaining service life is reduced to additional 5 years and the residual value is updated to $150,000. Depreciation for the
factory using these new parameters will start from 2024 with the double-declining method.
During 2024, GM produced a total of 15,000 units using the Machinery.
What is the total amount of depreciation expense GM will recognize at the end of 2023?
$1,290,000
$1,158,182
$1,165,000
500,000
2,000,000
$1,920,000
100,000
800,000
Straight-line
Sum-of-the years'-
digits
Double-declining
10
10
10
10
Transcribed Image Text:On Jan 1, 2023, GM purchased the following assets. Details for setting up depreciation schedules are summarized below: Assets Acquisition Cost Residual Method Useful life Truck 1/1/2023 Warehouse 1/1/2023 Multiple Choice O 1/1/2023 1/1/2023 O O 3,000,000 700,000 Factory Machinery 2,000,000 500,000 Unit-of production Machinery's estimated total production capacity is 50,000 units of cars. During 2023, GM produced a total of 10,000 units using the Machinery. On Dec 31, 2023, sudden changes in the operational and market conditions indicate that the sum of undiscounted future cash flows from the factory is now estimated at $1,800,000. The fair value of the Factory as of the date is $1,500,000. After recognizing depreciation expense for 2023 as scheduled, GM wrote-off the factory. The remaining service life is reduced to additional 5 years and the residual value is updated to $150,000. Depreciation for the factory using these new parameters will start from 2024 with the double-declining method. During 2024, GM produced a total of 15,000 units using the Machinery. What is the total amount of depreciation expense GM will recognize at the end of 2023? $1,290,000 $1,158,182 $1,165,000 500,000 2,000,000 $1,920,000 100,000 800,000 Straight-line Sum-of-the years'- digits Double-declining 10 10 10 10
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