Question
Morgan Corporation purchased a depreciable asset for $400,000 on January 1, 2012. The estimated salvage value is $40,000, and the estimated useful life is 9
Morgan Corporation purchased a depreciable asset for $400,000 on January 1, 2012. The estimated salvage value is $40,000, and the estimated useful life is 9 years. The straight-line method is used for depreciation. In 2015, Morgan changed its estimates to a total useful life of 5 years with a salvage value of $60,000. What is 2015 depreciation expense?
a. $40,000
b. $60,000
c. $110,000
d. $120,000
Torque Co. has equipment with a carrying amount of $1,600,000. The expected future net cash flows from the equipment are $1,630,000, and its fair value is $1,360,000. The equipment is expected to be used in operations in the future. What amount (if any) should Torque report as an impairment to its equipment?
a. No impairment should be reported.
b. $240,000
c. $30,000
d. $270,000
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