Computing and Assessing Plant Asset Impairment Zeibart Company purchased equipment for $180,000 on July 1, 2019, with an estimated useful life of 10 years and expected salvage value of $20,000. Straight-line depreciation is used. On July 1, 2023, economic factors cause the fair value of the equipment to decline to $72,000. On this date, Zeibart examines the equipment for impairment and estimates $100,000 in future cash inflows related to use of this equipment. a. Compute the impairment loss, if any. ${#1} Enter as a positive number. Enter $0 if the equipment would not be considered impaired. b. Determine the amount of depreciation Zeibart would record for the 12 months from July 1, 2023 through June 30, 2024. ${#2} Hint: Assume no change in salvage value. Round amount to the nearest whole dollar amount c. Prepare the journal entries to record the impairment loss and depreciation expense for the 12-month period. Select ‘No debit’ and ‘No credit’ in the Account fields of the first entry if there was no impairment. Account Debit Credit {#3} {#4} {#5} {#6}

Computing Depreciation, Asset Book Value, and Gain or Loss on Asset SalePalepu Company owns and operates a delivery van that originally cost $54,400. Straight-line depreciation on the van has been recorded for three years, with a $4,000 expected salvage value at the end of its estimated six-year useful life. Depreciation was last recorded at the end of the third year, at which time Palepu disposed of this van. a. Compute the net book value of the van on the sale date. ${#1} b. Compute the gain or loss on sale of the van if its sales price is for: (When applicable, use a negative sign with answers to indicate there is a loss on sale.) 1. Cash equal to book value of van. ${#2} 2. $30,000 cash. ${#3} 3. $24,000 cash. ${#4}

Computing Depreciation Under Straight-Line and Double-Declining-Balance A delivery van costing $27,000 is expected to have a $2,000 salvage value at the end of its useful life of 5 years. Assume that the truck was purchased on January 1, Year 1. Compute the depreciation expense for Year 1 and Year 2 under each of the following depreciation methods. Do not round intermediate calculations. Round answers to the nearest whole dollar amount. Year 1 Year 2 a. Straight-line ${#1} ${#2} b. Double-declining-balance ${#3} ${#4}

Computing Depreciation and Accounting for a Change of EstimateIn January, Rankine Company paid $10,200,000 for land and a building. An appraisal estimated that the land had a fair value of $3,000,000 and the building was worth $7,200,000. Rankine estimated that the useful life of the building was 30 years, with no residual value. a. Calculate annual depreciation expense using the straight-line method. ${#1} b. Calculate depreciation for the first and second year using the double-declining-balance method. Round to the nearest whole dollar amount.  Use rounded answers in subsequestion calculations.   Year 1 ${#2} Year 2 ${#3} c. Assume that in the third year, Rankine changed its estimate of the useful life of the building to 25 years. If the company is using the double-declining-balance method of depreciation, what amount of depreciation expense would Rankine record in the third year? Do not round until your final answer. Round answer to the nearest whole number. ${#4}

Identifying and Accounting for Intangible Assets On the first day of the year, Holthausen Company acquired the assets of Leftwich Company, in- cluding several intangible assets. These include a patent on Leftwich’s primary product, a device called a plentiscope. Leftwich carried the patent on its books for $2,100, but Holthausen believes that the fair value is $280,000. The patent expires in seven years, but competitors can be expected to develop competing patents within three years. Holthausen believes that, with expected techno- logical improvements, the product is marketable for at least 20 years. The registration of the trademark for the Leftwich name is scheduled to expire in 15 years. However, the Leftwich brand name, which Holthausen believes is worth $700,000, could be applied to related products for many years beyond that As part of the acquisition, Leftwich’s principal researcher left the company. As part of the acquisition, he signed a five-year noncompetition agreement that prevents him from developing competing products. Holthausen paid the scientist $420,000 to sign the agreement. a. What amount should be capitalized for each of the identifiable intangible assets? Patent ${#1} Trademark ${#2} Noncompetition agreement ${#3}   b. What amount of amortization expense should Holthausen record the first year for each asset? Round to the nearest dollar. Patent ${#4} Trademark ${#5} Noncompetition agreement ${#6}

Recording Asset Acquisition, Depreciation, and Disposal (FSET) On January 2, Year 1, Verdi Company acquired a machine for $240,000 cash. In addition to the purchase price, Verdi spent $5,000 for shipping and installation, and $7,000 to calibrate the machine prior to use. The company estimates that the machine has a useful life of 5 years and residual value of $19,500. Use the financial statement effects template to show how the following activities affect the balance sheet and income statement: a. Acquisition of the machine including all costs incurred to prepare it for its intended use. b. Depreciation in the first year. Verdi uses the straight-line method of depreciation. c. Sale of the machine on December 31, Year 4. Verdi sold the machine to another company for $35,000. Balance Sheet Income Statement Cash Noncash Contra Contributed Earned Net Transaction Asset + Assets – Assets = Liabilities + Capital + Capital Revenues – Expenses = Income a. Acquisition of machine {#1} {#2} {#3} {#4} {#5} {#6} {#7} {#8} {#9} b. First year depreciation {#10} {#11} {#12} {#13} {#14} {#15} {#16} {#17} {#18} c. Sale of machine in Year 4 {#19} {#20} {#21} {#22} {#23} {#24} {#25} {#26} {#27}

Recording the Sale of PPE Assets Garver Company sold machinery that had originally cost $165,000 for $55,000 in cash. The machinery was three years old and had been depreciated using the double-declining balance method assuming a five-year useful life and a residual value of $11,000. Prepare the journal entry to record the sale of the machinery. Account Debit Credit {#1} {#2} {#3} {#4}

Computing Straight-Line and Double-Declining-Balance DepreciationOn January 2, Dechow Company purchased a machine to help manufacture a part for one of its key products. The machine cost $196,830 and is estimated to have a useful life of six years, with an expected salvage value of $21,060. Compute each year’s depreciation expense for the first and second year for each of the following depreciation methods.Round answers to the nearest whole dollar amount. a. Straight-line Year 1 ${#1} Year 2 ${#2} b. Double-declining-balance (Do not round the depreciation rate used in your calculations.) Year 1 ${#3} Year 2 ${#4}

Computing Straight-Line and Double-Declining-Balance DepreciationOn January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $ 64,000, and its estimated useful life is five years, after which the expected salvage value is $4,000. Compute depreciation expense for each year of the machine’s useful life under each of the following depreciation methods: Note: Round answers to the nearest whole number, when applicable. a. Straight-line Year 1 ${#1} Year 2 ${#2} Year 3 ${#3} Year 4 ${#4} Year 5 ${#5} b. Double-declining-balanceYear 1 ${#6} Year 2 ${#7} Year 3 ${#8} Year 4 ${#9} Year 5 ${#10}

Estimating the Percent Depreciated The property and equipment footnote from the Deere & Company balance sheet follows ($ millions): PROPERTY AND DEPRECIATIONA summary of property and equipment at November 1, 2020, in millions of dollars follows:  2020 Land $282 Buildings and building equipment 4,114 Machinery and equipment 5,936 Dies, patterns, tools, etc 1,662 All other 1,115 Construction in progress 440 Total at cost 13,549 Less accumulated depreciation 7,771 Property and equipment – net $5,778   During 2020, the company reported $800 million of depreciation expense. Estimate the percent depreciated of Deere’s depreciable assets.  Round to one decimal place (i.e., 0.2467 = 24.7%){#1}%