Tamarisk Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $11,600,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Tamarisk's equipment. Tamarisk's controller estimates that expected future net cash flows on the equipment will be $7,308,000 and that the fair value of the equipment is $6,496,000. Tamarisk intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Tamarisk uses straight-line depreciation.
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- Splish Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $12,400,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Splish's equipment. Splish's controller estimates that expected future net cash flows on the equipment will be $7,812,000 and that the fair value of the equipment is $6,944,000. Splish intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Splish uses straight-line depreciation. (a) (c) Prepare the journal entry (if any) to record the impairment at December 31, 2020. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically Indented when amount is entered. Do not Indent manually) Date Account Titles and Explanation Dec. 31 (b) Textbook and Media Date Account Titles and…Roland Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10,000,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Roland’s equipment. Roland’s controller estimates that expected future net cash flows on the equipment will be $6,300,000 and that the fair value of the equipment is $5,600,000. Roland intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Roland uses straight-line depreciation. Instructions a. Prepare the journal entry (if any) to record the impairment at December 31, 2020. b. Prepare any journal entries for the equipment at December 31, 2021. The fair value of the equipment at December 31, 2021, is estimated to be $5,900,000. c. Repeat the requirements for (a) and (b), assuming that Roland intends to dispose of the equipment and that it…Crane Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10,100,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Crane's equipment. Crane's controller estimates that expected future net cash flows on the equipment will be $6,363,000 and that the fair value of the equipment is $5.656,000. Crane intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Crane uses straight-line depreciation.
- Sheridan Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2024 for $10,700,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2025, new technology was introduced that would accelerate the obsolescence of Sheridan's equipment. Sheridan's controller estimates that expected future net cash flows on the equipment will be $6,741,000 and that the fair value of the equipment is $5,992,000. Sheridan intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Sheridan uses straight-line depreciation. Prepare the journal entry (if any) to record the impairment at December 31, 2025. (If no entry is required, select "No entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.) Date Dec. 31 Account Titles and Explanation…Madison Company purchased a machine on February 1, 2018, for $200,000. On December 31, 2021, when the book value of the machine is $90,000, Madison Company checks to see if the machine is impaired. Due to recent technological advances Madison Company expects the machine to generate future cash flows of $70,000. If Madison Company estimates the current fair market value of the machine is $55,000 on December 31, 2021, what amount of impairment loss (if any) should be recorded? $20,000 O $35.000 O $60,000 O $90,000 O The asset is not impaired.The management of Sprague Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment was purchased in 1 January 2018 at a cost of $900,000, with an estimated useful life of 5 years, depreciated with sum of years digit method. On December 31, 2019, management projected the present value of future net cash flows from this equipment to be $300,000 and its fair value less cost of disposal to be $280,000. The company intends to use this equipment in the future. The remaining useful life of the equipment is 3 years. Instructions (a) Prepare the journal entry (if any) to record the depreciation and impairment at December 31, 2019. (b) Prepare the journal entry to record depreciation expense for 2020 At December 31, 2020, the equipment's recoverable amount is $270,000. Prepare the journal entry. (if any). (c)
- The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2020. On December 31, 2020, management projected its future net cash flows from this equipment to be $300,000 and its fair value to be $230,000. The company intends to use this equipment in the future. What accounting issues did management face in accounting for this impairment?The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2020. On December 31, 2020, management projected its future net cash flows from this equipment to be $300,000 and its fair value to be $230,000. The company intends to use this equipment in the future. Where should the gain or loss (if any) on the write-down be reported in the income statement?The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2020. On December 31, 2020, management projected its future net cash flows from this equipment to be $300,000 and its fair value to be $230,000. The company intends to use this equipment in the future. At December 31, 2021, the equipment’s fair value increased to $260,000. Prepare the journal entry (if any) to record this increase in fair value.
- The management of Petro Garcia Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2020. On December 31, 2020, management projected its future net cash flows from this equipment to be $300,000 and its fair value to be $230,000. The company intends to use this equipment in the future. Instructions a. Prepare the journal entry (if any) to record the impairment at December 31, 2020. b. Where should the gain or loss (if any) on the write-down be reported in the income statement? c. At December 31, 2021, the equipment’s fair value increased to $260,000. Prepare the journal entry (if any) to record this increase in fair value. d. What accounting issues did management face in accounting for this impairment?Dexter Inc. acquired a machine on January 1, 2010 for $520,000. The machine had an expected life of 20 years and salvage value of $40,000. Dexter uses straight line depreciation. On July 1, 2020, the company reviewed the machine for impairment and determined that its undiscounted future net cash flows totaled $200,000 and its discounted future net cash flows totaled $154,000. If no active market exists for the machine and the company plans to continue operating it, what should Dexter record as an impairment loss on July 1, 2020? Compute the carrying value of the machine on July 1, 2020. Is the machine impaired? Explain the basis of your conclusion. Include numbers. Compute the amount of impairment loss recorded on July 1, 2020 (if any). Compute the carrying value of the machine on December 31, 2020, assuming no change in its service life and salvage value.On January 1, 2022, the Vallahara Company purchased machinery for P 650,000 which it installed in a rented factory. It is depreciating the machinery over 12 years by the straight-line method to a residual value of P 50,000. Late in 2026, because of increasing competition in the industry, the company believes that its asset may be impaired and will have a remaining useful life of five years, over which it estimates the asset will produce total cash inflows of P 1,000,000 and will incur total cash outflows of P 825,000. The cash flows are independent of the company's other activities and will occur evenly each year. The company is not able to determine the fair value based on a current selling price of the machinery. The company's discount rate is 10%. Required 1. Prepare schedules to determine whether, at the end of 2026, the machinery is impaired and, if so, the impairment loss to be recognized. 2. If the machinery is impaired, prepare the journal entry to record the impairment.…