Blossom Company uses special strapping equipment in its packaging business. The equipment was purchased in January...

Blossom Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $6,000,000 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 Blossom's equipment. Blossom's controller estimates that expected future net cash flows on the equipment will be $3,750,000 and that the fair value of the equipment is $3,300,000. Blossom intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Blossom uses straight-line depreciation.

(a) What is the carrying value of the equipment at December 31, 2020?

(b) Prepare the journal entry (if any) to record the impairment at December 31, 2020.

(c) 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 $3,450,000.

(d) Repeat the requirements for (a) and (b), assuming that Blossom intends to dispose of the equipment and that it has not been disposed of as of December 31, 2021.

*I keep getting these sorts of problems wrong on my practice quiz so if you could break down how you're finding the solution I would greatly appreciate it!

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Nash Company uses special strapping equipment in its packaging business. The equipment was purchased in January...

Nash Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10,200,000 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 Nash’s equipment. Nash’s controller estimates that expected future net cash flows on the equipment will be $6,426,000 and that the fair value of the equipment is $5,712,000. Nash intends to continue using the equipment,...

Ayayai Company uses special strapping equipment in its packaging business. The equipment was purchased in January...

Ayayai Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2016 for $11,600,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2017, new technology was introduced that would accelerate the obsolescence of Ayayai’s equipment. Ayayai’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. Ayayai intends to continue using the...

Dolphin Company uses special strapping equipment in its packaging business. The equipment was purchased in January...

Dolphin Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2015 for $8,000,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2016, new technology was introduced that would accelerate the obsolescence of Dolphin’s equipment. Dolphin’s controller estimates that expected future net cash flows on the equipment will be $5,000,000 and that the fair value of the equipment is $4,400,000. Dolphin intends to continue using the equipment,...

Kingbird Company uses special strapping equipment in its packaging business. The equipment was purchased in January...

Kingbird Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2016 for $12,400,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2017, new technology was introduced that would accelerate the obsolescence of Kingbird’s equipment. Kingbird’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. Kingbird intends to continue using the equipment,...

Reveille, Inc uses special strapping equipment in its packaging business. The equipment was purchased in January...

Reveille, Inc uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $6,000,000 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 Reveille’s equipment. Reveille’s controller estimates that expected future net cash flows on the equipment will be $3,750,000 and that the fair value of the equipment is $3,300,000. Reveille intends to continue using the equipment,...

P11.14 Roland Corporation uses special strapping equipment in its packaging business. The equipment was purchased in January...

P11.14 Roland Corporation uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10 million and had an estimated useful life of eight years with no residual value. In early April 2020, a part costing $875,000 and designed to increase the machinery's efficiency was added. The machine's estimated useful life did not change with this addition. By December 31, 2020, new technology had been introduced that would speed up the obsolescence of Roland's equipment. Roland's...

Pina Colada Corporation uses special strapping equipment in its packaging business. The equipment was purchased in...

Pina Colada Corporation uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $9.60 million and had an estimated useful life of 8 years with no residual value. In early April 2020, a part costing $840,000 and designed to increase the machinery’s efficiency was added. The machine’s estimated useful life did not change with this addition. By December 31, 2020, new technology had been introduced that would speed up the obsolescence of Pina Colada’s...

Blue Spruce Company uses special strapping equipment in itspackaging business. The equipment was purchased in...

Blue Spruce Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $5,100,000 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 Blue Spruce’s equipment. Blue Spruce’s controller estimates that expected future net cash flows on the equipment will be $3,187,500 and that the fair value of the equipment is $2,805,000. Blue Spruce intends to...

Blossom Company purchased land, a building, and equipment on January 2, 2017, for $910,000. The company...

Blossom Company purchased land, a building, and equipment on January 2, 2017, for $910,000. The company paid $175,000 cash and signed a mortgage note payable for the remainder. Management's best estimate of the value of the land was $385,000; of the building, $425,000; and of the equipment, $130,000. Record the purchase. (Use Mortgage Payable for account.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually . If no entry is required, select "No Entry"...

Monte’s Coffee Company purchased packaging equipment on January 5, 2014, for $105,200. The equipment was expected...

Monte’s Coffee Company purchased packaging equipment on January 5, 2014, for $105,200. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $7,200. The equipment was used for 8,520 hours during 2014, 6,940 hours in 2015, and 4,540 hours in 2016. Required: 1. Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, and 2016 by (a) the straight-line method, (b) the units-of-output method, and...

Subjects