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3. a. New machinery, which replaced a number of employees, was installed and put in operation 2.5 in the last month of the fiscal year. The employees had been dismissed after payment of an extra month's wages, and this amount was added to the cost of the machinery. Discuss the propriety of the charge. If it was improper, describe the proper treatment. b. Unilever Company uses special strapping equipment in its packaging business. The 10 equipment was purchased in January 2016 for $10,000,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2017, new technology was introduced that would accelerate the obsolescence of Unilever's equipment. Unilever's controller estimates that expected future net cash flows on the equipment will be $6,300,000 and that the fair value of the equipment is $5,600,000. Unilever intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Unilever uses straight-line depreciation. Required: i. Prepare the journal entry (if any) to record the impairment at December 31, 2017. ii. Prepare any journal entries for the equipment at December 31, 2018. The fair value of the equipment at December 31, 2018, is estimated to be $5,900,000. iii. Repeat the requirements for (i) and (ii), assuming that Unilever intends to dispose of the equipment and that it has not been disposed of as of December 31, 2018. 4. 2 a. Taylor Corporation acquires a coal mine at a cost of $400,000. Intangible development costs total $100,000. After extraction has occurred, Taylor must restore the property (estimated fair value of the obligation is $80,000), after which it can be sold for $160,000. Taylor estimates that 4,000 tons of coal can be extracted. Required: If 700 tons are extracted the first year, prepare the journal entry to record depletion. Page 3 of 5 b. Parish Incorporation purchased a new machine for its assembly process on August 1, 2020. 8.5 The cost of this machine was $117,900. The company estimated that the machine would have a salvage value of $12,900 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,000 hours. Year-end is December 31. Required: Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. i. Straight-line depreciation for 2020. ii. Activity method for 2020, assuming that machine usage was 800 hours. iii. Sum-of-the-years-digits for 2021. iv. Double-declining-balance for 2021. C. 2 For what reasons should the percentage-of-completion method be used over the completed- contract method whenever possible? Justify your reasons