10-Red Corp. constructed a machine at a total cost of $54 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 11-year life using the straight-line method. The residual value is expected to be $3 million. At the beginning of 2018, Red decided to change to the sum-of-the-years'-digits method. Ignoring income taxes, what will be Red's depreciation expense for 2018? (Do not round intermediate calculations. Round final answer to 2 decimal places.)
Multiple Choice
$4.64 million.
$8.24 million.
$4.05 million.
$3.68 million.
In: Accounting
Parnell Company acquired construction equipment on January 1, 2017, at a cost of $72,700. The equipment was expected to have a useful life of five years and a residual value of $12,000 and is being depreciated on a straight-line basis. On January 1, 2018, the equipment was appraised and determined to have a fair value of $67,800, a salvage value of $12,000, and a remaining useful life of four years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16.
Assume that a U.S.–based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes.
Required:
1. Prepare journal entries for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.
- Record the entry for depreciation expense as per U.S. GAAP.
- Record the entry for depreciation expense as per IFRS.
- Record the entry for the revaluation of equipment as per U.S. GAAP.
- Record the entry for the revaluation of equipment as per IFRS.
- Record the entry for depreciation expense as per U.S. GAAP.
- Record the entry for depreciation expense as per IFRS.
2. Prepare the entry(ies) that Parnell would make on the December 31, 2018 conversion worksheet to convert U.S. GAAP balances to IFRS.
- Record the entry for recording profit on revaluation of equipment due to conversion from U.S. GAAP to IFRS.
- Record the entry for additional depreciation expense on revaluation of equipment due to conversion from U.S. GAAP to IFRS.
In: Accounting
Bracy Company acquired a new piece of construction equipment on January 1, 2015, at a cost of $92,300. The equipment was expected to have a useful life of 7 years and a residual value of $16,000 and is being depreciated on a straight-line basis.
On January 1, 2016, the equipment was appraised and determine to have a fair value of $92,920, a salvage value of $16,000, and a remaining useful life of six years.
a. Determine the amount of depreciation expense that Bracy should recognize in determining net income in 2015, 2016, and 2017 and the amount at which equipment should be carried on December 31, 2015, 2016, and 2017 balance sheets using (1) U.S. GAAP and (2) IFRS. In measuring property, plant, and equipment subsequent to the acquisition, Bracy used the revaluation model in IAS16.
b. Determine the adjustments that Bracy would make in 2015, 2016, and 2017 to reconcile net income and stockholders' equity under U.S. GAAP to IFRS.
In: Accounting
Parnell Company acquired construction equipment on January 1, 2017, at a cost of $71,700. The equipment was expected to have a useful life of five years and a residual value of $10,000 and is being depreciated on a straight-line basis. On January 1, 2018, the equipment was appraised and determined to have a fair value of $67,700, a salvage value of $10,000, and a remaining useful life of four years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16. Assume that a U.S.–based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes. Required: Prepare journal entries for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS. Prepare the entry(ies) that Parnell would make on the December 31, 2018 conversion worksheet to convert U.S. GAAP balances to IFRS.
In: Accounting
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Bracy Company acquired a new piece of construction equipment on January 1, 2015, at a cost of $141,000. The equipment was expected to have a useful life of 14 years and a residual value of $22,000 and is being depreciated on a straight-line basis. On January 1, 2016, the equipment was appraised and determined to have a fair value of $153,690, a salvage value of $22,000, and a remaining useful life of thirteen years. |
| a. |
Determine the amount of depreciation expense that Bracy should recognize in determining net income in 2015, 2016, and 2017 and the amount at which equipment should be carried on the December 31, 2015, 2016, and 2017 balance sheets using (1) U.S. GAAP and (2) IFRS. In measuring property, plant, and equipment subsequent to acquisition, Bracy uses the revaluation model in IAS 16. |
| Determine the adjustments that Bracy would make in 2015, 2016, and 2017 to reconcile net income and stockholders’ equity under U.S. GAAP to IFRS. (If there is no reconciliation adjustment select "No adjustment is required to". Input all values as positive numbers. |
In: Accounting
Gandolfi Construction Co. purchased a used CAT 336DL earth mover at a cost of $405,000 in January 2016. The company’s estimated useful life of this heavy equipment is 10 years, and the estimated salvage value is $83,000. Required: a. Using straight-line depreciation, calculate the depreciation expense to be recognized for 2016, the first year of the equipment’s life, and calculate the equipment’s net book value at December 31, 2018, after the third year of the equipment’s life. b. Using declining-balance depreciation at twice the straight-line rate, calculate the depreciation expense to be recognized for 2018, the third year of the equipment’s life.
In: Accounting
Parnell Company acquired construction equipment on January 1, 2017, at a cost of $75,000. The equipment was expected to have a useful life of five years and a residual value of $13,000 and is being depreciated on a straight-line basis. On January 1, 2018, the equipment was appraised and determined to have a fair value of $69,300, a salvage value of $13,000, and a remaining useful life of four years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16.
Assume that a U.S.- based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes.
Required:
a. Prepare journal entries for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S, GAAP and (2) IFRS
(1) Record the entry for depreciation expense as per U.S. GAAP
(2) Record the entry for depreciation expense as per IFRS
(3) Record the entry for the revaluation of equipment as per U.S. GAAP
(4) Record the entry for the revaluation of equipment as per IFRS
(5) Record the entry for depreciation expense as per U.S. GAAP
(6) Record the entry for depreciation expense as per IFRS
b. Prepare the entry(ies) that Parnell would make on the December 31, 2018 conversion worksheet to convert U.S. GAAP balances to IFRS
(1) Record the entry for recording profit on revaluation of equipment due to conversion from U.S. GAAP to IFRS
(2) Record the entry for additional depreciation expense on revaluation of equipment due to conversion from U.S. GAAP to IFRS
In: Accounting
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CH: 20; Irwin, Inc., constructed a machine at a total cost of $79 million. Construction was completed at the end of 2012 and the machine was placed in service at the beginning of 2013. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2016, Irwin decided to change to the straight-line method. |
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Ignoring income taxes, prepare the journal entry relating to the machine for 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) |
| Record the entry relating to the machine for 2016 |
In: Accounting
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CH 20; Irwin, Inc., constructed a machine at a total cost of $59 million. Construction was completed at the end of 2012 and the machine was placed in service at the beginning of 2013. The machine was being depreciated over a 10-year life using the straight-line method. The residual value is expected to be $3 million. At the beginning of 2016, Irwin decided to change to the sum-of-the-years’-digits method. |
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Ignoring income taxes, prepare the journal entry relating to the machine for 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) |
| Record the entry relating to the machine for 2016 |
In: Accounting
Your client, Barney Green, and his wife, Edith, attended a two-day conference in Maui related to Barry's work in architecture as a sole proprietor. The Greens went to Hawaii several days early so they could adjust to the jet lag and be ready for the conference. The $8,000 cost of the trip included the following expenses:
First-class airfare $2,500
Hotel (four days) $2,000
Conference fee $1,000 per person
Meals $1,500.
What expenses (if any) can Barney deduct for his business?
In: Accounting