11.37 Black Corporation has a machine that cost $12,000 and has accumulated depreciation of $4,000. Its fair value is $5,000. Case I: The undiscounted value of future cash flows is $9,000. Case II: The undiscounted value of future cash flows is $6,000. 15 For each case, determine if an impairment has occurred, and if yes, prepare the required journal entry
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- An asset group is being evaluated for an impairment loss. The following financial information is available for the asset group: Carrying Value=100,000,000 Sum of the undiscounted cash flows= 95,000,000 Fair value= 80,000,000 Carrying Value= $100,000,000 What is the value of the impairment loss?7. A company purchased a POS cash register on January 1 for RM5,400. This register has a useful life of 10 years and a salvage value of RM400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method? a. RM864 b. RM812 c. RM800 d. RM755 8. Which of the following is NOT an activity listed in the statement of cash flows? a. Investing Activities b. Financing Activities c. Operating Activities d. Funding Activities 9. Which of the following is an example of a deferral? a. Accruing year-end wages b. Recording prepaid rent c. Recognizing revenues earned but not yet recorded d. Recognizing expenses incurred but not yet recorded 10. Deciding whether to record a sale when the order for services is received or when the services are performed is an example of a a. recognition b. valuation issue. c. classification d. communication28. A tangible fixed asset has a book value of $50,000. Its fair value is $47,000. The sum of the estimated future cash flows is $50,500. The company will recognize: a. $3,000 impairment loss b. $3,500 impairment loss c. $500 impairment gain d. None of the above.
- Current Attempt in Progress Your answer is incorrect. Vaughn Company owns equipment that cost $1.035,000 and has accumulated depreciation of $437,000. The expected future net cash flows from the use of the asset are expected to be $625,000. The fair value of the equipment is $460,000. Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No entry for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry) Account Titles and Explanation impair Accumulated Depreciation Equipment eTextbook and Media List of Accounts Save for Later Last saved 5 days ago Saved work will be auto submitted on the due date. Auto- submission can take up to 10 minutes. Debit 138000 Credit 138000 Attempts: 1 of 4 used Submit AnswerABC Ltd conducted an impairment test of one of its cash generating units (CGU) at 30 June 20X0. The test determined that the recoverable amount of the entire CGU was $80,000. The carrying amounts of the assets of the entity at 30 June 20X0 were: Equipment (net of depreciation) Receivables Goodwill $63,000 15,000 22,000 Required Prepare the journal entry to account for the impairment of goodwill at 30 June 20X0.14. Bronze Company operates a production line which is treated as a cash generating unit. At year end, the carrying amounts of the noncurrent assets of the cash generating unit are: Goodwill 1,100,000 Plant and machinery 2,200,000 At year end, the recoverable amount of the production line is estimated at 2,700,000. What are the revised carrying amounts of the goodwill and plant and machinery, respectively?
- 5. During the end of the year, YGX Company presented the following information: Equipment Accumulated depreciation However, the equipment is found to be impaired due to obsolescence as well as physical damage. At year-end, the company has determined the following information related to the equipment: Undiscounted net cash inflows Fair value less cost of disposal Value in use or discounted net cash inflows a. 1,500,000 b. 2,000,000 9,000,000 3,500,000 What amount should be reported as impairment loss for the year? c. 500,000 d. 0 4,500,000 3,500,000 3,000,000Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?Estimate the average total estimated useful life of depreciable property, plant, and equipment. Starbucks reports 580.6 million of depreciation and amortization in the statement of cash flows, of which 4.5 million relates to amortization of limited-life intangible assets. Does the estimate reconcile with stated accounting policy on useful lives for property, plant, and equipment? Explain.
- MN.18. An asset (according to the historical cost model) with a carrying amount as at December 31, X0 of $120,000. This asset is depreciated on a straight-line basis and has a remaining useful life of 3 years. The asset is expected to generate a net cash flow of $30,000 per year for the next 3 years, after which it will be liquidated with a liquidation value of $10,000 with no additional disposal costs. Currently, this property is marketable for $60,000 and $5,000 respectively.Require:1. Determine the asset's value in use at an estimated discount rate of 6%.2. Calculate property loss and record related journal entries (if any).6. The management of Sprague Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $900,000 with depreciation to date of $500,000 as of December 31, 2022. On December 31, 2022, management projected the present value of future net cash flows from this equipment to be $300,000 and its fair value less cost of disposal to be $250,000. The company intends to use this equipment in the future. The remaining useful life of the equipment is four years. Required: Prepare the journal entry (if any) to record the impairment at December 31, 2022.A company owns machinery with a book value of P2,200,000. It is estimated that the machinery will generate future cash flows of P1,995,000. The machinery has a fair value of P1,915,000. The journal entry to record the impairment loss will reduce income from continuing operations by P205,000. include a P285,000 credit to the asset account. record an extraordinary loss of P80,000. increase the asset's Accumulated Depreciation account by P285,000.