Research Case: Super Soups, Inc. is a Chicago based company that produces soup. Super Soups is publicly traded and has a December 31st fiscal year end. The demand for Super Soup’s products has increased significantly during COVID-19 (primarily to the number of people working from home). As a result of the increased demand on November 1, 2021 Super Soups purchased new production equipment which is more efficient than the old equipment. As a result of the purchase of the new equipment, Souper Soups will no longer use some of the old production equipment and is planning on offering it for sale. The original cost of the old equipment was $300,000 and $155,000 of depreciation had been recognized on this old equipment as of Nov. 1, 2021 which results in a net carrying value of $145,000. Additionally, the fair value of the old equipment is $115,000. The CEO and CFO agree that the equipment will be offered at a price of $125,000. It is expected that the sale should occur in early 2022. In planning for the year end financial statements the CFO has asked you to research the following accounting issue: Accounting Issue: What is the correct amount for the old equipment on the 12/31/21 balance sheet? a. $300,000 b. $145,000 c. $125,000 c. $115,000
Research Case:
Super Soups, Inc. is a Chicago based company that produces soup. Super Soups is publicly traded and has a December 31st fiscal year end. The demand for Super Soup’s products has increased significantly during COVID-19 (primarily to the number of people working from home). As a result of the increased demand on November 1, 2021 Super Soups purchased new production equipment which is more efficient than the old equipment. As a result of the purchase of the new equipment, Souper Soups will no longer use some of the old production equipment and is planning on offering it for sale. The original cost of the old equipment was $300,000 and $155,000 of
In planning for the year end financial statements the CFO has asked you to research the following accounting issue:
Accounting Issue: What is the correct amount for the old equipment on the 12/31/21
a. $300,000
b. $145,000
c. $125,000
c. $115,000
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