Problem 1: Depreciation & Impairment

Flagg Corp purchase and placed into service $3.3 million worth of virology testing equipment on March 31, 2021. The equipment is expected to last 6 years and/or 2 billion batches, and have a salvage value of $450,000. Calculate the depreciation expense for 2021, 2022, and 2023 for the following methods:

1.1:Straight-line.

1.2:Sum of the year's digits.

1.3:Triple declining balance.

1.4:Units of production (assume 650M, 850M and 600M batches in years 2021, 2022, and 2023). (go out to six decimals on the cost per unit)

1.5:Assume Flagg Corp used the straight-line method. On January 1, 2024, Flagg Corp determined the equipment would generated net free cash flows (undiscounted) of $350,000, $300,000 and $250,000 in each of the next 3 years and nothing thereafter. Further, Flagg Corp uses an internal interest rate of 19%. If necessary, record the impairment journal entry as of January 1, 2024.