Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 11, Problem 11.19BE
To determine
To prepare:
Given information:
Cost of testing material and supplies is $600,000.
Cost of research consultant is $100,000.
Cost of planning and designing consultant is $135,000.
Cost of laboratory equipment is $900,000.
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At the beginning of current year, Apple Company purchased
a plating machine for P5,400,000.
The entity received a government grant of P400,000 toward
this capital cost.
The machine is to be depreciated on a 20% reducing balance
basis over 10 years. The estimated residual value is P200,000.
Required:
Prepare journal entries for the current year, assuming the
grant is accounted for as:
a. Deferred income
b. Deduction from asset
Gates Inc., a calendar year firm, currently uses a plant asset in operations that originally cost $110,000 and has a useful life of eight years and a $10,000 residual value. Gates uses the straight
line depreciation method. As an impairment indicator was present, Gates reviewed the asset for impairment. At January 1 of the current year, which is the beginning of the asset's third year of
useful life, total remaining cash inflows attributable to the asset are estimated to be $120,000, while total cash outflows in running and maintaining the machine are estimated to be $65,000,
Based on quoted prices and the condition of the asset, Gates estimates the fair value of the asset to be $40.000. The cost to sell the asset is approximately $5,000. Gates plans to continue to use
the asset in production, although at a much lower rate of utilization.
Required
a. Record the impairment loss on January 1 of the current year,
Date
Jan 1
Account Name
Date
Dec 31
To record met
Dr.
b. Record depreciation…
GENERAL JOURNAL
Date
Accounts
Debit
Credit
31-Dec
31-Dec
Chapter 11 Solutions
Intermediate Accounting
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