Exam 11: Property, Plant, and Equipment and Intangible Assets: Utilization and Impairment

Required: Determine the amount, if any, of the goodwill impairment loss that Dooling must recognize on these assets.

The physical life of a depreciable asset sets the lower limit of its service life.

Gulf Consulting Co. reported the following on its December 31, 2013, balance sheet: Equipment (at cost)…..$700,000 In a disclosure note, Gulf indicates that it uses straight-line depreciation over five years and estimates salvage value as 10% of cost. Gulf's equipment averages 3.5 years at December 31, 2013. What is the book value of Gulf's equipment at December 31, 2013?

On January 1, 2011, Al's Sporting Goods purchased store fixtures at a cost of $180,000. The anticipated service life was 10 years with no residual value. Al's has been using the double-declining balance method, but in 2013 adopted the straight-line method because the company believes it provides a better measure of income. Al's has a December 31 year-end. The journal entry to record depreciation for 2013 is:

Canliss Mining uses the retirement method to determine depreciation on its office equipment. During 2011, its first year of operations, office equipment was purchased at a cost of $14,000. Useful life of the equipment averages four years and no salvage value is anticipated. In 2013, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2013 depreciation of:

Required: Compute depreciation for 2013 and 2014 and the book value of the spooler at December 31, 2013 and 2014, assuming the units-of-production is used.