1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Lubov Fominskaja [6]
3 years ago
6

Presented below is information related to equipment owned by Porto Company on December 31, 2017. Cost $5,600,000 Accumulated dep

reciation to date 640,000 Expected future net cash flows 4,000,000 Fair value 2,720,000 Assume that Porto will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years. Fill the missing amounts and choose the correct option. For Porto company, the recoverability test compares $ 4960000 to $ 4000000. As a result, the asset the recoverability test, because is/are less than so a on impairment is recorded in 2017. Prepare the journal entry to record depreciation expense for 2018.
Business
1 answer:
KATRIN_1 [288]3 years ago
7 0

Answer:

Depreciation $ 1,000,000 (debit)

Accumulated Depreciation $ 1,000,000 (credit)

Explanation:

<em>Step 1 Analyse whether there was an impairment </em>

Impairment of an asset happens when its Carrying Amount is greater than its Recoverable Amount.

<u><em>Carrying Amount</em></u>

Carrying Amount = Cost - Accumulated depreciation

                             = $5,600,000 - $640,000

                             = $ 4,960,000

<em><u>Recoverable Amount</u></em>

Is the higher of :

  1. Value in use : $4,000,000 and
  2. Fair Value less Cost to sell $2,720,000

Therefore Recoverable Amount is $4,000,000

<em><u>Impairment</u></em>

Carrying Amount  > Recoverable Amount, therefore the Equipment Was impaired

The impairement loss is $ 960,000

<em>Step 2 Calculate the depreciation 2018.</em>

Depreciation Charge = Cost / Useful life

                                   = ($5,600,000 - $640,000 -  $ 960,000) / 4

                                   = $ 1,000,000

<u>Journal</u>

Depreciation $ 1,000,000 (debit)

Accumulated Depreciation $ 1,000,000 (credit)

You might be interested in
COMPARE AND CONTRAST WHOLE LIFE,VARIABLE LIFE AND TERM LIFE?
Sergeu [11.5K]

Answer:

WHOLE LIFE: This policy covers the person for his entire life and then pays a cash revenue that is guaranted for the investments made during the life of the owner of the policy. For this benefits to be obtained the person must pay a fixed high premium for it.

VARIABLE LIFE: This policy covers the person for the same period as the whole life insurance but the premium is not fixed as the cash revenue for investments is not guaranted.

TERM LIFE: The term life insurance is set up for an especific period the premiums are the lowest and persons won't collect any cash payments for revenues made out of investments at the end of the coverage of the policy.

3 0
3 years ago
Read 2 more answers
12–2. Offer and acceptance. Schmidt, the owner of a small business, has a large piece of used farm equipment for sale. He offers
Fiesta28 [93]

Answer:

Schmidt, the owner of a small business, has a large piece of used farm equipment for sale. He offers to sell the equipment to Barry for $10,000. Discuss the legal effects of the following events on the offer:  

• Schmidt dies prior to Barry’s acceptance, and at the time he accepts, Barry is unaware of Schmidt’s death.  

• The night before Barry accepts, fire destroys the equipment.  

• Barry pays $100 for a thirty-day option to purchase the equipment. During this period, Schmidt dies, and later Barry accepts the offer, knowing of Schmidt’s death.  

• Barry pays $100 for a thirty-day option to purchase the equipment. During this period, Barry dies, and Barry’s estate accepts Schmidt’s offer within the stipulated time period.

Explanation:

A contact is a binding agreement between two or more people.

Schmidt dies prior to Barry’s acceptance, and at the time he accepts, Barry is unaware of Schmidt’s death: Schmidt's death would normally null this offer but because Barry is unaware of his death at the time of acceptance, and the offer is not for a personal service, the offer holds.

The night before Barry accepts, fire destroys the equipment: there is no binding contract before a buyer accepts an offer.  

Barry pays $100 for a thirty-day option to purchase the equipment. During this period, Schmidt dies, and later Barry accepts the offer, knowing of Schmidt’s death: The option keeps the offer alive regardless of Schmidt’s death as long as Barry paid for the option .

Barry pays $100 for a thirty-day option to purchase the equipment. During this period, Barry dies, and Barry’s estate accepts Schmidt’s offer within the stipulated time period: the death of the offeree, in this case Barry, would normally nullify the offer but due to the option and the acceptance within the stipulated time,  the offer holds.

5 0
3 years ago
The fund has not borrowed any funds, but its accrued management fee with the portfolio manager currently totals $25,000. There a
kvv77 [185]

Answer:

$9.79

Explanation:

The computation of the  net asset value of the fund is shown below:

Net asset value of the fund = Equity ÷ Total outstanding shares

where,

Equity

= Total assets - total liabilities

where,

Total assets equal to

= 220,000 shares × $35 + 320,000 shares × $40 + 420,000 shares × $15 + 620,000 shares × $20

= $7,700,000 + $12,800,000 + $6,300,000 + $12,400,000

= $39,200,000

And, liabilities is $25,000

So, the net asset value of the fund equal to

= ($39,200,000 - $25,000) ÷ (4,000,000 shares)

= $9.79

7 0
2 years ago
The total factory overhead for Bardot Marine Company is budgeted for the year at $600,000. Bardot Marine manufactures two types
Olenka [21]

Answer: the total number of budgeted direct labor hours for the year. - 600 DLH

the single plantwide factory overhead rate- $100 per DLH

the factory overhead allocated per unit for each product using the single plantwide factory overhead rate. Speedboats $ per unit Bass boats $ per unit--- For Both Products $1,200

Explanation:

5 0
3 years ago
Checks written in late December do not appear on a December 31 Bank Statement because they were not cleared by the bank as of Ma
Shkiper50 [21]

Answer:

B) Subtract them from the bank balance.

Explanation:

When you are adjusting your bank statement you must subtract any outstanding checks and add any deposits in transit.

In this case, the checks that were written at the end of December will probably be cashed during the next months, but the company must adjust their bank balance because they know that the checks will eventually be cashed, sooner or later.

6 0
3 years ago
Other questions:
  • 2. Julia is interested in knowing how many grams of protein she should have in addition to the calories from protein. She often
    7·1 answer
  • In an economy where planned aggregate spending is given by PAE = 5,500 + 0.6Y - 20,000r, the interest rate is currently 5 percen
    14·1 answer
  • The common stock of Alpha Manufacturers has a beta of 1.18 and an actual expected return of 13.33 percent. The risk-free rate of
    11·1 answer
  • Seamstresses at Rear Gear, a large maker of backpacks, have become more productive due to the firm’s recent purchase of new sewi
    12·1 answer
  • Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct lab
    7·1 answer
  • Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received
    13·1 answer
  • Montana Industries has computed the following unit costs for the year just ended:
    7·1 answer
  • An investment strategy has an expected return of 21 percent and a standard deviation of 15 percent. Assume investment returns ar
    11·1 answer
  • What are some products and services that may be purchased by calling the eight companies customer service number
    7·1 answer
  • Economic models that make unrealistic assumptions may be useful in analyzing some economic problems.
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!