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Redlands Inc. made the following investments on January 1, 2020, its first year of business: Expected Life Cost Allocation Item Cost Warehouse $100 20 years Straight-line Machine 60 10 years Double-declining Patent 20 5 years Straight-line Invest in stock* 10 Indefinite Not applicable * Rancho's stock had a fair (market) values of $8 and $7 on December 31, 2020 and December 31, 2021, respectively.

Redlands Inc. made the following investments on January 1, 2020, its first year of business: Expected Life Cost Allocation Item Cost Warehouse $100 20 years Straight-line Machine 60 10 years Double-declining Patent 20 5 years Straight-line Invest in stock* 10 Indefinite Not applicable * Rancho's stock had a fair (market) values of $8 and $7 on December 31, 2020 and December 31, 2021, respectively.

FINANCIAL ACCOUNTING
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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Redlands Inc. made the following investments on January 1, 2020, its first year of business: Item Cost Expected Life Cost Allocation Warehouse $100 20 years Straight-line Machine 60 10 years Double-declining Patent 20 5 years Straight-line Invest in stock* 10 Indefinite Not applicable * Rancho's stock had a fair (market) values of $8 and $7 on December 31, 2020 and December 31, 2021, respectively. Required (B): 1. Compute the gain or loss on the sale of the warehouse if Redlands sold it for $111l on January 1, 2021. 2. Compute the impairment loss on the machine if Redlands determined it had a fair value of $45 on January 1, 2021.
Transcribed Image Text:Redlands Inc. made the following investments on January 1, 2020, its first year of business: Item Cost Expected Life Cost Allocation Warehouse $100 20 years Straight-line Machine 60 10 years Double-declining Patent 20 5 years Straight-line Invest in stock* 10 Indefinite Not applicable * Rancho's stock had a fair (market) values of $8 and $7 on December 31, 2020 and December 31, 2021, respectively. Required (B): 1. Compute the gain or loss on the sale of the warehouse if Redlands sold it for $111l on January 1, 2021. 2. Compute the impairment loss on the machine if Redlands determined it had a fair value of $45 on January 1, 2021.
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