Valix Finacc vol 1 Problem 19-36 to 38

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 19 Problem 19-36 to 38

Problem 19-36  Answer  C

Cost – 12/31/2004                                                                                                           2,800,000

Accumulated depreciation – 8/31/2008 (2,400,000 / 96 months x 44)                1,100,000

Book value – 8/31/2008                                                                                                  1,700,000

Fair value                                                                                                                        1,500,000 Impairment loss                                                                                                          200,000

                                                                                                                  259

 

Problem 19-37  Answer  C   

Carrying value                                                                                                 28,000,000

Decommissioning cost                                                                                               (  8,000,000)

Adjusted carrying value                                                                                              20,000,000

Fair value less cost to sell – higher (20,000,000 less 1,000,000)                          19,000,000

Impairment loss                                                                                                             1,000,000

Value in use                                                                                                                 26,000,000

Decommissioning cost                                                                                               (  8,000,000)

Adjusted value in use                                                                                                  18,000,000

Problem 19-38  Answer  C

Carrying value – 12/31/2007                                                                                        7,000,000

Depreciation for 2008 (20%)                                                                                          (1,400,000)

Carrying value – 12/31/2008                                                                                        5,600,000

Carrying value – 12/31/2008 (assuming no impairment)                                             7,200,000

Reversal of impairment loss                                                                                        1,600,000