QUESTION6 Accounting for impairment losses: Involves a two-step process to first

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QUESTION6 Accounting for impairment losses: Involves a two-step process to first test for impairment and then record the loss. Applies only to depreciable, operational assets Applies only to assets with finite lives O All of these QUESTION 7 Adding a refrigeration unit to a delivery truck that previously did not have this capability is an example of Repairs and maintenance. e Legal defense of intangible 3ssets. QUESTION 8 Aliance Products purchased equipment tha: cost s120,000. IE had an estimated useful life of four years and no residual value. The equipment was depreciated by the straight line method and was sold at the end of the third year of use for $25.000 cash. Allance shou'd record; A Rain of $5,000. A loss of 55.000. Neither a gan nor a loss since the computer was saia a: ts book value. Ncither a gan nor a oss since the gain would rot be recogrized. 10 pa QUESTION 9 of four years and no Prooucts ourcnas value, Ine cquioment aas oeprec ared by the straisnalire methed and was so a bt the ens of the seconaye pment tha coss $120.000 It had an est MacBook Air

Explanation / Answer

Ques6.Accounting for Impairment losses ?

Ans: As per U S GAAP, Involves a Two –step process first test impairment and recognise and record the loss

It is applies to non depreciable asset also.,,

As Per US GAAP They are two-step impairment test for finite life intangible assets

U.S. GAAP has a one-step impairment test for indefinite-life intangible assets and

for tangibles market value or expected cash flow shall be taken for assessing the impairment And Impairment is not all time is necessary unless there is a situation which indicate impairment.

Ques:7

Adding a refrigeneration to the delivery truck ?

It is an additions which adding the additional part to the truck which result in increase in another capacity of the same asset

Ques 8: a loss of $5000

Depreciation per year 120000/4years=30000 per year

Selling at the end of 3rd year for 25000

Accumulated Depreciation at the end of 3rd year is 30000*3=90000

So 120000-90000=30000---asset value at the end of 3rd year and sold for only 25000

Which result in 5000 loss

Ques 9: a gain of $5000

Here Accumulated depreciation at the end of 2nd year is 60000: Value of asset at the end of 2nd year is 120000-60000=60000

The asset is sold for 65000 then A gain of 5000

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