Equipment Cost - $245,000

Est. Useful Life - 10 years

Salvage Value - 35,000

Est. Units - 100,000

Actual Units - Year 1 - 10,000 Year 2 - 12,000 Year 3- 11,000

REVISION INFORMAITON

New Estimated Units - 83,000

New Salvage Value - 25,700

1. Assume Moss Inc. calculated depreciation using the straight-line method in 1. above. After 4 years the company is testing for impairment in value due to a change in usage of the equipment. The company estimates future cash flows of $40,000 per year for the next 4 years. The company requires a rate of return of 6% on their investments. Calculate and record impairment, if any.

2. The company estimated the equipment would produce 100,000 units under the units of production method and produced 10,000, 12,000 and 11,000 units during the 1^st 3 years. Calculate depreciation expense for the 1^st 3 years.

3. Assume after utilizing the asset for 3 years in B. above, the company revised their production estimate to a lifetime production of 83,000 units and a revised salvage value of $25,700. Calculate the revised depreciation expense per unit beginning in year 4.

PLEASE EXPLAIN