On July 1, 2019, Sport Company purchased for $3,600,000 in snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $150,000. Depreciation is taken for the portion of the year the asset is used.
Instructions
Complete the form below by determining the depreciation expense and year-end book values for 2019 and 2020 using the

Sum-of-the-Years'-Digits Method 2019, 2020
Equipment $3,600,000 $3,600,000
Less: Accumulated Depreciation _______ _______
Year-End Book Value _______ _______
Depreciation Expense for the Year _______ _______

Double-Declining Balance Method
Equipment $3,600,000 $3,600,000
Less: Accumulated Depreciation _______ _______
Year-End Book Value _______ _______
Depreciation Expense for the Year _______ _______

Problem 2:

Leon Corp. purchased Spinks Co. 4 years ago and at that time recorded goodwill of $640,000. The
Spinks Division’s net identifiable assets, including goodwill, have a carrying amount of
$1,530,000. The fair value of the division is estimated to be $1,600,000.
Instructions

(a) Explain whether or not Leon Corp. must prepare an entry to record the impairment of the goodwill. Include the entry, if necessary.

(b) Repeat instruction (a) assuming that the fair value of the division is estimated to be $1,425,000.