Question 2 (15 marks) A. Mava Corp. purchased a warehouse for $3,040,000 on October 1, 2017. The warehouse has been depreciated using the sum-of-the-years'-digits method with the estimated usage summarized below: Useful life 20 years Residual value $ 205,000 Required: A1. Calculate the depreciation expense for the first full year of the warehouse's useful life from October 1, 2017, to September 30, 2018. (2 marks) A2. Calculate the depreciation expense for the second full year of the warehouse's useful life from October 1, 2018, to September 30, 2019. (2 marks) A3. Calculate the depreciation expense for the year ended December 31, 2018. (2 marks) B. Information related to trucks owned by Macy Corp. at December 31, 2019, is presented below. Cost Accumulated depreciation to date Value-in-use Fair value less cost of disposal $7,000,000 1,500,000 5,000,000 4,400,000 Required: B1. Determine any impairment loss for the trucks on December 31, 2019. (2 marks) B2. Prepare the journal entry to record the impairment loss. (2 marks) C. Read each statement below carefully. On the answer sheet, put a T in the blanket if the statement is TRUE. Put an F in the blanket if the statement is FALSE. C1. Intangible assets derive their value from the right (claim) to receive cash in the future. C2. All research phase and development phase costs are expensed as incurred. C3. Capitalization of research phase costs begins once the project is economically viable. C4. Companies are required to assess the estimated useful life and salvage value of intangible assets at least annually. C5. Impairment testing is conducted annually for both limited-life and indefinite-life intangible assets. (5 marks) Question 2 (15 marks) A. Mava Corp. purchased a warehouse for $3,040,000 on October 1, 2017. The warehouse has been depreciated using the sum-of-the-years'-digits method with the estimated usage summarized below: Useful life 20 years Residual value $ 205,000 Required: A1. Calculate the depreciation expense for the first full year of the warehouse's useful life from October 1, 2017, to September 30, 2018. (2 marks) A2. Calculate the depreciation expense for the second full year of the warehouse's useful life from October 1, 2018, to September 30, 2019. (2 marks) A3. Calculate the depreciation expense for the year ended December 31, 2018. (2 marks) B. Information related to trucks owned by Macy Corp. at December 31, 2019, is presented below. Cost Accumulated depreciation to date Value-in-use Fair value less cost of disposal $7,000,000 1,500,000 5,000,000 4,400,000 Required: B1. Determine any impairment loss for the trucks on December 31, 2019. (2 marks) B2. Prepare the journal entry to record the impairment loss. (2 marks) C. Read each statement below carefully. On the answer sheet, put a T in the blanket if the statement is TRUE. Put an F in the blanket if the statement is FALSE. C1. Intangible assets derive their value from the right (claim) to receive cash in the future. C2. All research phase and development phase costs are expensed as incurred. C3. Capitalization of research phase costs begins once the project is economically viable. C4. Companies are required to assess the estimated useful life and salvage value of intangible assets at least annually. C5. Impairment testing is conducted annually for both limited-life and indefinite-life intangible assets
