In Year 1, Manny Company purchased a piece of equipment with a cost of 76000 and a useful life of 5 years. At the beginning of Year 3, the company has determined the following: Expected future cash flows $42000 PV of expected future cash flows $37000 Net selling price $38000 Assuming the company used straight-line depreciation and the residual value is 0, what is the depreciation in Years 1 and 2 for US GAAP and IFRS? What is the net carrying amount at the beginning of Year 3 for US GAAP and IFRS? What is the impairment, if any, for US GAAP and IFRS as of the beginning of Year 3?
In Year 1, Manny Company purchased a piece of equipment with a cost of 76000 and a useful life of 5 years. At the beginning of Year 3, the company has determined the following: Expected future cash flows $42000 PV of expected future cash flows $37000 Net selling price $38000 Assuming the company used straight-line depreciation and the residual value is 0, what is the depreciation in Years 1 and 2 for US GAAP and IFRS? What is the net carrying amount at the beginning of Year 3 for US GAAP and IFRS? What is the impairment, if any, for US GAAP and IFRS as of the beginning of Year 3?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
In Year 1, Manny Company purchased a piece of equipment with a cost of 76000 and a useful life of 5 years.
At the beginning of Year 3, the company has determined the following:
| Expected future cash flows | $42000 |
| PV of expected future cash flows | $37000 |
| Net selling price | $38000 |
- Assuming the company used straight-line
depreciation and the residual value is 0, what is the depreciation in Years 1 and 2 for US GAAP and IFRS? - What is the net carrying amount at the beginning of Year 3 for US GAAP and IFRS?
- What is the impairment, if any, for US GAAP and IFRS as of the beginning of Year 3?
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