Rhino Corporation is a manufacturer of automobile parts. Its capital assets include specialized equipmentthat is being used in the finishing stage of its manufacturing process.The equipment was purchased in 2020 and is being depreciated using the units of production method. ByDecember 31, 2021, the book (carrying) value was $430,000 (after depreciation expense had beenrecorded). However, at that time, Rhino became aware of new technology that would make the equipmentobsolete within the next five years. An appraisal puts the equipment's future undiscounted net cash flows at$390,000 and its fair value at $300,000. While considering its options for the eventual replacement, Rhinowill continue using the equipment, but will change to straight-line depreciation.InstructionsAssuming Rhino is a private Canadian corporation apply ASPE,a) Prepare the journal entry, if any, to record the impairment loss at December 31, 2021.(4 marks)b) Prepare the journal entries to record 2022 and 2023 depreciation. (4 marks)

a) Rhino Corporation needs to record an impairment loss for the equipment as of December 31, 2021.…

Answered: Rhino Corporation is a manufacturer of…

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 66P: At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been...

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The following transactions involving intangible assets of Blossom Corporation occurred on or near December 31, 2020. 1. Minton paid Grand Company $360,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Blossom is in business. 2. Blossom spent $540,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful. 3. In January, 2021, Blossom's application for a patent (#2 above) was granted. Legal and registration costs incurred were $189,000. The patent runs for 20 years. The manufacturing process will be useful to Minton for 10 years. 4. Blossom incurred $144,000 in successfully defending one of its patents in an infringement suit. The patent expires during December, 2024. 5. Blossom incurred $432,000 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a…
Oriole Company purchased land on February 1, 2020, at a cost of $2,102,000. It estimated that a total of 53,000 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $191,000. It believes it will be able to sell the property afterwards for $274,000. It incurred developmental costs of $525,000 before it was able to do any mining. In 2020, resources removed totaled 10,600 tons. The company sold 5,300 tons. Compute the following information for 2020. (a) Per unit mineral cost $ /ton (b) Total material cost of December 31, 2020, inventory $ +A (c) Total material cost in cost of goods sold at December 31, 2020 $
On January 1, 2024, XYZ Corporation purchased office equipment for $50,000, paying $20,000 in cash and signing a note payable for the remaining $30,000. The office equipment has an estimated useful life of 10 years, and XYZ Corporation uses straight-line depreciation with no salvage value. At the end of the year, the company records depreciation for the office equipment. What are the journal entries required for the initial purchase of the equipment and the year-end depreciation? On March 15, 2024, ABC Company purchased a delivery truck for $80,000. The company paid $50,000 in cash and financed the remaining $30,000 with a 5-year loan. The delivery truck has an estimated useful life of 8 years and a salvage value of $8,000. At the end of the year, ABC Company records depreciation for the truck using the straight-line method. What are the journal entries required for the purchase and year-end depreciation? On September 1, 2024, DEF Enterprises purchased new office furniture for $15,000.…
Blue Inc. acquired some manufacturing equipment in January 2018 for $400,000 and depreciated it $40,000 each year for three years on a straight-line basis. During 2021, the manufacturer announced a new technology for this type of equipment that will make the old models obsolete by the end of 2024. As a result, Blue will plan to replace the equipment at that time, effectively reducing the asset's life from ten to seven years. In its financial statements for 2021, Blue should: A. Charge $280,000 in depreciation expense. B. Report the book value of the equipment in its December 31,2021 balance sheet at $210,000. C. Make an adjustment to retained earnings for the error in measuring depreciation during 2018-2020. D. None of these answer choices are correct. O B O D O o o0
George Young Industries (GYI) acquired industrial robots at the beginning of 2018 and added them to the company’s assembly process. During 2021, management became aware that the $2.8 million cost of the equipment was inadvertently recorded as repair expense on GYI’s books and on its income tax return. The industrial robots have 10-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method for financial reporting purposes and for tax purposes it is considered to be MACRS 7-year property. Cost deducted over 7 years by the modified accelerated recovery system as follows: Year MACRSDeductions 2018 $ 400,120 2019 685,720 2020 489,720 2021 349,720 2022 250,040 2023 249,760 2024 250,040 2025 124,880 Totals $ 2,800,000 The tax rate is 25% for all years involved.Required:1. & 3. Prepare any journal entry necessary as a direct result of the error described and the adjusting…
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