On January 1, 2021, Lynne Company has equipment having a useful life of 10 years with the following cost and accumulated depreciation. The company uses straight-line method in depreciating its equipment. Equipment-P5,000,000 Accumulated depreciation-P1,500,000 On December 31, 2021, after recording depreciation expense for the year, the equipment was subjected to an assessment and it was found to be impaired due to obsolescence and physical damage. Lynne Company has determined the following: Undiscounted cash flows of the equipment-P3,100,000 Fair value of the equipment less cost to sell-P2,250,000 Discounted cash flows of the equipment-P2,500,000 Lynne Company recognizes an impairment loss on December 31, 2021 at a. 1,000,000 b. 750,000 c. 500,000
On January 1, 2021, Lynne Company has equipment having a useful life of 10 years with the following cost and accumulated depreciation. The company uses straight-line method in depreciating its equipment. Equipment-P5,000,000 Accumulated depreciation-P1,500,000 On December 31, 2021, after recording depreciation expense for the year, the equipment was subjected to an assessment and it was found to be impaired due to obsolescence and physical damage. Lynne Company has determined the following: Undiscounted cash flows of the equipment-P3,100,000 Fair value of the equipment less cost to sell-P2,250,000 Discounted cash flows of the equipment-P2,500,000 Lynne Company recognizes an impairment loss on December 31, 2021 at a. 1,000,000 b. 750,000 c. 500,000
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter10: Long-lived Tangible And Intangible Assets
Section: Chapter Questions
Problem 22E
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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27.On January 1, 2021, Lynne Company has equipment having a useful life of 10 years with the following cost and accumulated depreciation . The company uses straight-line method in depreciating its equipment.
Equipment-P5,000,000
Accumulated depreciation-P1,500,000
On December 31, 2021, after recording depreciation expense for the year, the equipment was subjected to an assessment and it was found to be impaired due to obsolescence and physical damage. Lynne Company has determined the following:
Undiscountedcash flows of the equipment-P3,100,000
Fair value of the equipment less cost to sell-P2,250,000
Discounted cash flows of the equipment-P2,500,000
Lynne Company recognizes an impairment loss on December 31, 2021 at
Equipment-P5,000,000
Accumulated depreciation-P1,500,000
On December 31, 2021, after recording depreciation expense for the year, the equipment was subjected to an assessment and it was found to be impaired due to obsolescence and physical damage. Lynne Company has determined the following:
Undiscounted
Fair value of the equipment less cost to sell-P2,250,000
Discounted cash flows of the equipment-P2,500,000
Lynne Company recognizes an impairment loss on December 31, 2021 at
a. 1,000,000
b. 750,000
c. 500,000
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