XYZ Corporation purchased a new computer server for $78,000 from Dell. Dell added 7% sales taxes and shipping costs of $2,000. XYZ information technology employees spent 100 hours installing and testing the new server. Average wages for XYZ information technology employees are $50 per hour. XYZ estimates the server has a useful life of 4 years and $5,000 residual value. XYZ uses double-declining balance deprecation method for computer equipment. The server was placed in service on April 1, 2014. XYZ fiscal year ends on December 31.
What is recorded as computer asset? _____________________________________
What is the depreciation expense for 2014? _____________________________________
ABC Company develops cures for cancer.
What is recorded in the Patent long-term asset account? ____________________________
What is recorded in R&D and other expense accounts? ______________________________
Intelligent Corporation recently acquired new semiconductor assembly equipment to be used in its production process. Intelligent Corporation traded in old semiconductor equipment that had an original cost of $300,000 and accumulated depreciation on the date of the exchange of $225,000. The fair value of the old equipment is $85,000. In addition, Intelligent Corporation signed a promissory note to pay $200,000 in three years plus interest at a market interest rate of 6%.
What is the cost recorded for the new equipment? ____________________________________
What is the gain/(loss) on disposal of the old equipment? ____________________________
The Blueberry Phone Company operates a factory to build its Crackberry phone. Technological advances by Blueberry’s competitors demolished Crackberry sales. Consequently, management is evaluating the Crackberry factory for impairment as of December 31, 2014. Below are facts about the factory.
Original cost $150 million
Accumulated depreciation 65 million
Future cash flows:
2015 45 million
2016 20 million
2017 10 million
Is factory impaired? ____________ Why? ________________________________________________
What is the present value of future cash flows rounded to $100,000 (Assume the cash is received at the end of each year and use an interest rate of 10%.):
2015 ________________________________
2016 ________________________________
2017 _______________________________
Total ________________________________
What is the impairment loss? ___________________________________________
Depreciation:
( 1) What is recorded as computer asset?
Cost | $ 78000 |
Sales Tax ( $78000 * 7%) | $5460 |
Shipping Cost | $2000 |
Installing cost ( 100hour *$50 per hour) | $5000 |
Total cost of computer | $90,460 |
2) What is the depreciation expense for 2014?
Explanation:
1) Dep .Rate:
= 1/ useful life *2 *100
= 1/4 × 2 ×100
= 50%
2) Dep. for 2014
= $ 90,460 × 50% × 9/12
= $ 33,922.5
3) For ,2014 dep exp is calculated for 9 months i.e. Apr to Dec.
Get Answers For Free
Most questions answered within 1 hours.