Question

In: Accounting

Kane Biotech was preparing the annual financial statements and, as part of the year-end procedures, assessed...

Kane Biotech was preparing the annual financial statements and, as part of the year-end procedures, assessed the assets and prepared the following alphabetized schedule based on adjusted values at December 31, 2020: (Do not round intermediate calculations. Round final answers to nearest whole dollar.)

Asset Date of Purchase Deprec. Method* Cost Residual Value Useful Life Accum. Deprec. Recoverable Amount
Equipment May 1/15 Units $ 63,000 $ 3,160 8,800 units $ 39,440 $ 6,160
Furniture Jun. 28/15 DDB 30,000 3,800 8 yrs 25,169 5,650
Land Apr. 5/15 N/A 103,000 N/A N/A N/A 119,800
Office building Apr. 5/15 SL 113,000 33,200 15 yrs 39,200 70,500
Warehouse Apr. 5/15 SL 82,000 28,000 20 yrs 30,938 63,100

*DDB = Double-declining-balance; SL = Straight-line; Units = Units-of-production; N/A = Not applicable

Required:
1.
Record any impairment losses at December 31, 2020. Assume Kane Biotech has recorded no impairment losses in previous years.



2. Record depreciation for each asset at December 31, 2021. Assume that there was no change in the residual values or useful lives regardless of any impairment losses that might have occurred. The equipment produced 2,700 units during 2021.

please do all calculations on page (journal entries)

Solutions

Expert Solution

1. Record any impairment losses at December 31, 2020. Assume Kane Biotech has recorded no impairment losses in previous years.

Asset Cost Accumulated Depreciation Carrying Value Recoverable Amount Impairment Revised Carrying Amount
[A] [B] [C = A-B] [D] [E = C-D]
Equipment $63,000 $39,440 $23,560 $6,160 $17,400 $6,160
Furniture $30,000 $25,169 $4,831 $5,650 NA $4,831
Land $103,000 NA NA $119,800 NA $119,800
Office Buildings $113,000 $39,200 $73,800 $70,500 $3,300 $70,500
Warehouse $82,000 $30,938 $51,062 $63,100 NA $51,062

Prepare entry as follows:

Account Titles Debit Credit
Impairment Loss $20,700
Equipment $17,400
Office Buildings $3,300

____________________________________________________________

2. Record depreciation for each asset at December 31, 2021. Assume that there was no change in the residual values or useful lives regardless of any impairment losses that might have occurred.

Working as follows:

Account Titles Debit Credit
Impairment Loss $20,700
Equipment $17,400
Office Buildings $3,300
Depreciation $8,365.20
Equipment $1,890
Furniture $1,207.75
Office Building $3,730
Warehouse $1,537.45

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