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8. On January 2, 2018, Q. Tong Inc. purchased equipment with a cost of $10,440,000, a useful life of 10 years and $40,000 salvage value.
8. On January 2, 2018, Q. Tong Inc. purchased equipment with a cost of $10,440,000, a useful life of 10 years and $40,000 salvage value. The Company uses sum-of-year digits depreciation. At December 31, 2018 and December 31, 2019, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end: 12/31/2018 12/31/2019 Fair value less cost to sell $9,315,000 $6,500,000 Value-in-use $9,350,000 $6,215,000 There is no change in the asset's useful life or salvage value. The 2019 income statement will report: A. Impairment Loss of $347,273. B. Impairment Loss of HK$10,000. C. Recovery of Impairment Loss of $347,273. D. Recovery of Impairment Loss of HK$1,000,000. Use the following information for questions 9-10. A company uses the retail inventory method. The following information is available for the current year. Cost Retail Beginning inventory 273,000 427,000 Purchases 1,032,500 1,452,500 Freight-in 17,500 Employee discounts 7,000 Net markups 52,500 Net markdowns 70,000 Sales 1,365,000 9. If the ending inventory is to be valued at approximately lower-of-cost-or-net realizable value, the cost-to-retail ratio should be: A. 68.48%. B. 70.39%. C. 71.05% D. 69.46%. 10. The approximate cost of the ending inventory by the conventional retail method is: A. $348,145. B. $344,911. C. $340,354 D. $335,552
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