Question 3 On September 30, 2018, Harris Pilton purchased a noncurrent asset at a cost of $800,000 with a salvage value of $50,000 and estimated 10 year useful life At December 31, 2020, the company decided it would sell the asset within the next three months The company began advertising for the asset and is currently in the process of receiving offers The fair value of the asset is currently $550,000 and it is estimated to cost $20,000 to sell The total present value of the future cash flows that will be received from the use of the asset is $200,000 Instructions At what value should this asset be reported on the December 31, 2020, balance sheet Should this asset be depreciated for the remaining months until it is sold Should this asset be reported separately or as part of the firms non current assets Question 4 You are presented with the following information for Bobos Balloons Inc The firm reports its inventory using LIFO Inventory items Cost Replacement cost NRV Normal profit margin Aluminum $70,000 $62,500 $56,000 $5,100 Cedar 86,000 79,400 94,000 7,400 Louvered 112,000 124,000 186,400 18,500 Instructions Determine the final value of the inventory using the individual item approach and record an adjusting entry (if necessary) The financial manager of the company believes that whether a company uses an allowance account to reduce the inventory value or not, there are no accounting differences since the allowance to reduce inventory account must always be closed at the end of every accounting period Briefly explain whether you agree or disagree with this statement and why

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Question 3 On September 30, 2018, Harris Pilton purchased a noncurrent asset at a cost of $800,000 with a salvage value of $50,000 and estimated

Question 3

On September 30, 2018, Harris Pilton purchased a noncurrent asset at a cost of $800,000 with a salvage value of $50,000 and estimated 10-year useful life. At December 31, 2020, the company decided it would sell the asset within the next three months. The company began advertising for the asset and is currently in the process of receiving offers. The fair value of the asset is currently $550,000 and it is estimated to cost $20,000 to sell. The total present value of the future cash flows that will be received from the use of the asset is $200,000.

Instructions

At what value should this asset be reported on the December 31, 2020, balance sheet?
Should this asset be depreciated for the remaining months until it is sold?
Should this asset be reported separately or as part of the firms non-current assets?

Question 4

You are presented with the following information for Bobos Balloons Inc. The firm reports its inventory using LIFO.

Inventory items	Cost	Replacement cost	NRV	Normal profit margin
Aluminum	$70,000	$62,500	$56,000	$5,100
Cedar	86,000	79,400	94,000	7,400
Louvered	112,000	124,000	186,400	18,500

Instructions

Determine the final value of the inventory using the individual item approach and record an adjusting entry (if necessary).

The financial manager of the company believes that whether a company uses an allowance account to reduce the inventory value or not, there are no accounting differences since the allowance to reduce inventory account must always be closed at the end of every accounting period. Briefly explain whether you agree or disagree with this statement and why.