A company has a long-lived asset with a carrying value of $120,000, expected future cash flows of $130,000, present value of expected future cash flows of $100,000, and a market value of $105,000. What amount of impairment loss should be reported?
A company issued a purchase order on December 15, Year 1, for a piece of capital equipment that costs $100,000. The capital equipment was shipped from the vendor on December 31, Year 1, and received by the company on January 5, Year 2. The equipment was installed and placed in service on February 1, Year 2. On what date should the depreciation expense begin?
A. December 31, Year 1.
B. December 15, Year 1.
C. January 5, Year 2.
D. February 1, Year 2.
Carr, Inc., purchased equipment for $100,000 on January 1, Year 1. The equipment had an estimated 10-year useful life and a $15,000 salvage value. Carr uses the 200% declining balance depreciation method. In its Year 2 income statement, what amount should Carr report as depreciation expense for the equipment?
On January 2, Year 1, Reed Co. purchased a machine for $800,000 and established an annual depreciation charge of $100,000 over an 8-year life. At the beginning of Year 4, after issuing its Year 3 financial statements, Reed concluded that $250,000 was a reasonable estimate of the sum of the undiscounted net cash inflows expected to be recovered through use of the machine for the period January 1, Year 4 through December 31, Year 8. The machine's fair value was $200,000 at the beginning of Year 4. In Reed's December 31, Year 4, balance sheet, the machine should be reported at a carrying amount of
Clay Company started construction of a new office building on January 1, Year 8, and moved into the finished building on July 1, Year 9. Of the building's $2.5 million total cost, $2 million was incurred in Year 8 evenly throughout the year. Clay's incremental borrowing rate was 12% throughout Year 8, and the total amount of interest incurred by Clay during Year 8 was $102,000. What amount should Clay report as capitalized interest at December 31, Year 8?
At the beginning of the year, Cann Co. started construction on a new $2 million addition to its plant. Total construction expenditures made during the year were $200,000 on January 2, $600,000 on May 1, and $300,000 on December 1. On January 2, the company borrowed $500,000 for the construction at 12%. The only other outstanding debt the company had was a 10% interest rate, long-term mortgage of $800,000, which had been outstanding the entire year. What amount of interest should Cann capitalize as part of the cost of the plant addition?
On January 2, Year 5, Clarinette Co. purchased assets for $400,000 that were to be depreciated over 5 years using the straight-line method with no salvage value. Taken together, these assets have identifiable cash flows that are largely independent of the cash flows of other asset groups. At the end of Year 6, Clarinette, as the result of certain changes in circumstances indicating that the carrying amount of these assets may not be recoverable, tested them for impairment. It estimated that it will receive net future cash inflows (undiscounted) of $100,000 as a result of continuing to hold and use these assets, which had a fair value of $80,000 at the end of Year 6. Thus, the impairment loss to be reported at December 31, Year 6, is
A company has a parcel of land to be used for a future production facility. The company applies the revaluation model under IFRS to this class of assets. In Year 1, the company acquired the land for $100,000. At the end of Year 1, the carrying amount was reduced to $90,000, which represented the fair value at that date. At the end of Year 2, the land was revalued, and the fair value increased to $105,000. How should the company account for the Year 2 change in fair value?
A. By recognizing $15,000 in profit or loss.
B. By recognizing $10,000 in profit or loss and $5,000 in other comprehensive income.
C. By recognizing $10,000 in other comprehensive income.
D. By recognizing $15,000 in other comprehensive income.
Ichor Co. reported equipment with an original cost of $379,000 and $344,000 and accumulated depreciation of $153,000 and $128,000, respectively, in its comparative financial statements for the years ended December 31, Year 2 and Year 1. During Year 2, Ichor purchased equipment costing $50,000 and sold equipment with a carrying amount of $9,000. What amount should Ichor report as depreciation expense for Year 2?