Question
Kane Biotech was preparing the annual financial statements and, as part of the year-end procedures, assessed the assets and prepared the following alphabetized schedule based
Kane Biotech was preparing the annual financial statements and, as part of the year-end procedures, assessed the assets and prepared the following alphabetized schedule based on adjusted values at December 31, 2020: (Do not round intermediate calculations. Round final answers to nearest whole dollar.)
Asset | Date of Purchase | Deprec. Method* | Cost | Residual Value | Useful Life | Accum. Deprec. | Recoverable Amount | |||||||||
Equipment | May 1/15 | Units | $ | 60,000 | $ | 4,750 | 8,500 units | $ | 35,750 | $ | 7,750 | |||||
Furniture | Jun. 28/15 | DDB | 27,000 | 3,500 | 8 yrs | 22,559 | 5,050 | |||||||||
Land | Apr. 5/15 | N/A | 100,000 | N/A | N/A | N/A | 116,800 | |||||||||
Office building | Apr. 5/15 | SL | 107,000 | 30,500 | 15 yrs | 36,500 | 67,500 | |||||||||
Warehouse | Apr. 5/15 | SL | 77,500 | 25,000 | 20 yrs | 27,938 | 60,100 | |||||||||
*DDB = Double-declining-balance; SL = Straight-line; Units = Units-of-production; N/A = Not applicable
Required: 1. Record any impairment losses at December 31, 2020. Assume Kane Biotech has recorded no impairment losses in previous years. (Record impairment loss on PPE, if any.)
2. Record depreciation for each asset at December 31, 2021. Assume that there was no change in the residual values or useful lives regardless of any impairment losses that might have occurred. The equipment produced 2,550 units during 2021.(Record the revised depreciation on equipment.)
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