Answer:
(1) $19,500
(2) $142,000
(3) $27,000
(4) $15,000
Explanation:
Depreciation is the systematic allocation of the cost of an asset to the p/l over the useful life of the asset. It may be computed as
Depreciation = (cost - salvage value)/useful life
Annual depreciation = ($220,000 - $25,000)/10
= $19,500
4 years later
Carrying amount of the equipment
= $220,000 - 4 * $19,500
= $220,000 - $78,000
= $142,000
If the asset is impaired
An asset is said to be impaired when the carrying amount is higher than recoverable amount where the recoverable amount is the higher of the fair value less cost to sell or the value in use of the asset which is the present value of the future expected inflow from the use of the asset.
Value in use = $115,000
Fair value = $85,000
Value in use = $115,000
Impairment loss = $142,000 - $115,000
= $27,000
Remaining number of years is 6
New carrying amount = $115,000
the annual depreciation expense = ($115,000 - $25,000)/6
= $90,000/6
= $15,000
Find the journal entries in the given attachments
Note:
<em>correction</em>s-------- factory overhead = $13,438 Machinery = $42,488
Answer:
The sunk cost is the old broken machine
Explanation:
Giving the following information:
Model 370 machine costing $459,000
Model 240 machine costing $415,000
A machine was purchased 4 years ago for $423,000.
Management decided to buy the model 240.
A sunk cost is a cost that has previously been incurred and cannot be recovered. In this exercise, the sunk cost is the old broken machine. No matter what decision management makes, the machine is broken and can't be repaired or sold.
Answer: A. an increase in Accounts Payable is added to determine cash flow from operations.
Explanation:
We should note that accounts payable refer to the amounts that the company pays to its suppliers, therefore the sum of the the total amount that's owed to the suppliers will be shown on the balance sheet of the company as accounts payable.
Therefore, when adjusting accrual earnings to obtain cash flows from operations, an increase in accounts payable is added to determine cash flow from operations.
Answer: 3.9 times; an improvement; efficiency
Explanation:
Inventory turns is calculated by the formula:
= COGS / Inventory
= 8.4 / 2.50
= 3.36
Increased by 15%:
= 3.36 * (1 + 15%)
= 3.864
= 3.9 times
<em>Inventory turns is used to show how often the inventory was sold in a period. A higher ratio therefore presents </em><u><em>increased efficiency</em></u><em> and is desired. </em>