Take Test: Q10-CH 11
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Question 1
1.
JJ Corporation purchased a machine on July 1, 2010 for $750,000. The machine was estimated to have a useful life of 10 years with a salvage value of $46,000. JJ uses the sum-of-years-digits method to depreciate this class of equipment. During 2013, it became apparent that the machine would become uneconomical to operate after December 31, 2016, and that the machine would have no scrap value.
What amount should be reported for Depreciation Expense as of December 31, 2013 for this machine? $[Blank_1]
Answer
10 points
Question 2
1.
On March 1, 2010, Thomas Company acquired a machine for $3,000,000 and estimates a 10 year life, $150,000 salvage and uses the Double-Declining-Balance method for this class of asset. At the end of 2013 (after recording depreciation for the current year), Thomas determined it was necessary to evaluate this equipment for impairment. The company estimates this equipment will generate cash inflows of $400,000 per year and cash outflows of $150,000 per year for the next four years. The company uses a 15% discount rate to evaluate operating assets.
Determin the amount of any impairment loss to be recognized if Thomas plans to dispose of this asset. The present value of an ordinary annuity of 15% is 2.85498; present value of $1 is 0.57175; and future value of an annuity is 4.99338. Thomas believes the present value is a good indicator of fair value in today’s market. They also feel that $13,745 is a reasonable estimate for disposal costs.
Impairment Loss: $[Blank_1]
Answer
10 points
Question 4
1.
Using the information presented above, determine the Impairment Loss (if any) on the Copyright: $[Blank_2]
Answer
10 points
Question 5
1.
Using the information presented in #3 above, determine the book value of TOTAL INTANGIBLE ASSETS (NET) that would appear on the December 31, 2013 balance sheet:
$[Blank_3]answer
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