Question 4

Company A acquired Company B for $50,000,000 on January 1. The fair value of Company B's accounts are the following: Cash $2,500,000; Accounts Receivable $8,000,000; Inventory $3,500,000; Property, Plant, and Equipment $20,000,000; Liabilities $18,000,000; Common Stock $12,000,000. On December 31, the fair value of Company B was $26,000,000. Compute the impairment loss, if any.

Question 5

Company A exchanged used equipment for another equipment with a fair value of $23,000. The company also received cash of $3,000 in this exchange. The used equipment had a book value of $21,000 and a fair value of $25,500. Using this information, answer the following questions:

1.Does this transaction result in a loss or a gain for Company A?

2.What amount of loss/gain will the company recognize as a result of this transaction, if any?

Question 6

Company X purchased four assets on January 1, 2019:

Asset A has an original cost of $40,000, salvage value of $3,000, and useful life of 4 years.

Asset B has an original cost of $65,000, salvage value of $6,000, and useful life of 7 years.

Asset C has an original cost of $32,000, salvage value of $5,000, and useful life of 5 years.

Asset D has an original cost of $88,000, salvage value of $10,000, and useful life of 10 years.

The company uses the composite method for depreciation. Calculate the composite depreciation rate and composite life of the assets. Record the journal entry for depreciation on December 31, 2019.