THE FOLLOWING INFORMATION RELATES TO Q 16 to Q 18 On 1 January 2020, the following information is available about a Rocket owned by Longford Company: Cost $95,000,000; Accumulated Depreciation $45,000,000. Until 1 January 2020, the Rocket has not had any Loss on Impairment. On 1 January 2020, Longford Company finds that the Recoverable Amount of the Rocket is $40,000,000. The remaining life of the Rocket on 1 January 2020 is 5 years and the Residual Value is zero. On 1 January 2021, Longford Company finds that the Recoverable Amount of the Rocket is $37,000,000. Q 16 What is the Loss on Impairment (if any) on the Rocket on 1 January 2020? Q 17 What is the Recovery of Impairment Loss (if any) on the Rocket on 1 January 2021? Q 18 What is the Carrving Amount of the Rocket on 31 December 20212

THE FOLLOWING INFORMATION RELATES TO Q 16 to Q 18 On 1 January 2020, the following information is available about a Rocket owned by Longford Company: Cost $95,000,000; Accumulated Depreciation $45,000,000. Until 1 January 2020, the Rocket has not had any Loss on Impairment. On 1 January 2020, Longford Company finds that the Recoverable Amount of the Rocket is $40,000,000. The remaining life of the Rocket on 1 January 2020 is 5 years and the Residual Value is zero. On 1 January 2021, Longford Company finds that the Recoverable Amount of the Rocket is $37,000,000. Q 16 What is the Loss on Impairment (if any) on the Rocket on 1 January 2020? Q 17 What is the Recovery of Impairment Loss (if any) on the Rocket on 1 January 2021? Q 18 What is the Carrving Amount of the Rocket on 31 December 20212

Name: THE FOLLOWING INFORMATION RELATES TO Q 16 to Q 18On 1 January 2020, t
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Description: THE FOLLOWING INFORMATION RELATES TO Q 16 to Q 18On 1 January 2020, the following information is available about a Rocket owned by LongfordCompany: Cost $95,000,000; Accumulated Depreciation $45,000,000.Until 1 January 2020, the Rocket has not had a

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 5E: Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar...

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On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?
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During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the following three situations: 1. Machine A was purchased for 50,000 on January 1, 2014. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 25,000. The estimated residual value remains at 5,000, but the service life is now estimated to be 1 year longer than estimated originally. 2. Machine B was purchased for 40,000 on January 1, 2017. It had an estimated residual value of 5,000 and an estimated service life of 10 years. it has been depreciated under the double-declining-balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method. 3. Machine C was purchased for 20,000 on January 1, 2018, Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value of the machine is 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2019.
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Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?
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Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.
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A Company purchased equipment on January 1, 2019 for AED 70,000. It is estimated that the equipment will have a AED 5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life. Required: Solve the following independent questions where you need to show all the required calculations: Part A Compute the amount of depreciation expense for the year ended December 31, 2020, using the straight-line method of depreciation. Part B:- If 16,000 units of product are produced in 2019 and 24,000 units are produced in 2020, what is the book value of the equipment at December 31, 2020? The company uses the units-of-activity depreciation method. I Part C If the company uses the double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation-Equipment account at December 31, 2020?