Q1) Jake Plant Inc. owns equipment for which it paid $90 million. At the end of 2019, accumulated depreciation on the equipment was $27 million. Due to adverse economic conditions, Plant's management determined that it should assess whether an impairment should be recognized for the equipment. The estimated future cash flows (without discounting) to be provided by the equipment total $60 million, and its fair value at that point totals $40 million. Under these circumstances, Plant:

A) Would record no impairment loss on the equipment.

B) Would record a $3 million impairment loss on the equipment.

C) Would record a $23 million impairment loss on the equipment.

D) Would record a $30 million impairment loss on the equipment. 

Q2) In 2018, John Bonham Inc. acquired Zeppi Company and recorded $245 million of goodwill as a result of this acquisition. At the end of 2019, Bonham decided to test for impairment of goodwill associated with its acquisition of Zeppi Company. At the end of 2019, the book value of Zeppi Company's net assets (including goodwill) in Bonham's Company's accounting records was $580 million. Also at the end of 2019, Bonham assessed the fair value of Zeppi to be $700 million, while the fair value of Zeppi's net assets was $550 million. The amount of the goodwill impairment loss that Bonham would record at the end of 2019 is:

A) $150 million.

B) $95 million.

C) $0

D) $120 million. 

Q3) In 2019, Jimmy Page Company discovered a building addition completed in January 2017, at a cost of $360,000 was charged to building maintenance expense in error. The cost should have been charged to the building asset account. The company uses straight line depreciation; the estimated life of the building addition when it was completed in 2017 was 25 years, the estimated residual value of the building addition was $100,000, and the company records a full year depreciation on all assets place in service during the year. Fixing this error in 2019 would have the following impact on Page's accounting records:

1. A) increase the book value of the equipment by $239,200.
2. B) increase the book value of the equipment by $360,000.
3. C) decrease retained earnings by $360,000.
4. D) increase retained earnings by $339,200.