Exam 10: Depreciation,Amortization,and Impairment

Which of the following is not a negative element under the "capital assets,tangible" classification?

Assume that ABC Inc.has a single asset with a historical cost of $100 and accumulated amortization of $50.The asset could be sold today for $60 less a 10% sales commission.Alternatively,ABC could use the asset to generate discounted operating cash flows of $40 throughout its remaining useful life and then sold for discounted proceeds amounting to $4.Assuming that ABC adheres to IFRS,is the asset impaired?

With the exception of Goodwill,all impairment losses are reversible under ASPE.

XYZ purchased a machine that cost $62,000; the estimated residual value is $2,000.The following data are available at the end of the first year of use: Estimated Life Utilization During First Year years One year service hours production units Based on the forgoing data,complete the following tabulation.Show computations. Method Amortization Expense First Year A Straight-line \_\_\_ $\text { B) Sum-of-the-years'-digits... }\quad\quad\quad\quad\$\_\_\_\_$ $\text { C) Senice hours. }\quad\quad\quad\quad\$\_\_\_\_$ D $\quad$ Declining balance. $\quad$$\quad$$\$\_\_\_$ E $\quad$ Productive output. $\quad$$\quad$$\$\_\_\_$

The 2010 revaluation journal entry would include

Given the information provided above,what would be the carrying value of Aerospace Inc's Property,Plant and Equipment on January 1^st,2014?

On January 1,2013,N'Store for U Ltd.purchased a weight machine for $11,000.The machine has an estimated useful life of 4 years and a $1,000 estimated residual value.It will be depreciated using the SYD method.The amortization expense and accumulated amortization account balances,before the closing entries on December 31,2014 (end of the accounting period) will be: 2014 Amortization Accumulated amortization Expense at the end of 2014 1 \ 3,000 \ 4,000 2 3,000 7,000 3 4,000 4,000 4 4,000 7,000

Which of the following amortization methods produces the highest amortization expense in the first year of life of an asset that cost $10,000,has an estimated useful life of four years,and an estimated residual value of $1,500?

Under both the retirement and replacement systems of amortization,no gain or loss is recognized on disposal,but an accumulated amortization account continues to be used.

(Appendix) ABC adheres to IFRS and applies the revaluation model to account for its Machinery.Prior to 2009,there was no balance in the company's Revaluation Surplus (OCI) accounts relating to its long-lived assets.The following year-end data pertains to the company's machinery: Cost Accumulated Depreciation Fair Value 2009 \ 100 0 \ 120 2010 \ 100 10 \ 60 2011 \ 100 20 \ 100 Required: For each year,provide the revaluation entries assuming that ABC applies: a) The elimination method and, b) The proportional method.

Amortization accounting is not a matter of valuation.

The revaluation model applies only to long-lived assets with an active market.

On January 3,2014,Garcia Co.purchased machinery.The machinery has an estimated useful life of eight years and an estimated residual value of $25,000.The amortization applicable to this machinery was $54,000 for 2015,computed by the straight-line method.Calculate what the acquisition cost of the machinery was.

On September 19,2013,Samson Co.purchased machinery for $150,000.Residual value was estimated to be $6,000.The machinery will be amortized over eight years using the double-declining balance method.If amortization is computed on the basis of the nearest full month,calculate the amount that Samson should record for amortization expense for 2014 on this machinery.Samson Co.has a December 31 year-end and only accounts for amortization at year-end.

Mossman Co.purchased machinery on January 2,2012,for $360,000.The straight-line method is used and useful life is estimated to be 10 years,with a $40,000 residual value.At the beginning of 2018 Mossman spent $96,000 to overhaul the machinery.After the overhaul,Mossman estimated that the useful life would be extended four years (14 years total),and the residual value would be $30,000.Calculate the amortization expense for 2018.Mossman Co.has a December 31 year-end and adjusting entries are only made at year-end.

On April 13,2014,Halifax Co.purchased machinery for $150,000.Residual value was estimated to be $6,000.The machinery will be amortized over 10 years using the double-declining balance method.If amortization is computed on the basis of the nearest full month,calculate the amount Halifax should record amortization expense for 2015 on this machinery.Halifax Co.has a December 31 year-end and adjusting entries are only made at year-end.

Accumulated amortization,as used in accounting,represents:

Goodwill is said to be impaired if the carrying value of the CGU including Goodwill is greater than its Fair Value.

Assume that ABC Inc.has a single asset with a historical cost of $100 and accumulated amortization of $50.The asset could be sold today for $60 less a 10% sales commission.Alternatively,ABC could use the asset to generate undiscounted operating cash flows of $40 throughout its remaining useful life and then sold for $4.Assuming that ABC adheres to ASPE,is the asset impaired?

One flaw in the inventory system of amortization is that current market fluctuations,rather than the effect of wear and tear,may be dominant.