Question

Kane Biotech was preparing the annual financial statements and, as part of the year-end procedures, assessed the assets and prepared the following alphabetized schedule based on adjusted values at December 31, 2020: (Do not round intermediate calculations. Round final answers to nearest whole dollar.)

Asset	Date of Purchase	Deprec. Method*	Cost	Residual Value	Useful Life	Accum. Deprec.	Recoverable Amount
Equipment	May 1/15	Units	$	63,000		$	3,160		8,800 units	$	39,440		$	6,160
Furniture	Jun. 28/15	DDB		30,000			3,800		8 yrs		25,169			5,650
Land	Apr. 5/15	N/A		103,000			N/A		N/A		N/A			119,800
Office building	Apr. 5/15	SL		113,000			33,200		15 yrs		39,200			70,500
Warehouse	Apr. 5/15	SL		82,000			28,000		20 yrs		30,938			63,100

*DDB = Double-declining-balance; SL = Straight-line; Units = Units-of-production; N/A = Not applicable

Required:
1. Record any impairment losses at December 31, 2020. Assume Kane Biotech has recorded no impairment losses in previous years.

2. Record depreciation for each asset at December 31, 2021. Assume that there was no change in the residual values or useful lives regardless of any impairment losses that might have occurred. The equipment produced 2,700 units during 2021.

please do all calculations on page (journal entries)

Answer 1

1. Record any impairment losses at December 31, 2020. Assume Kane Biotech has recorded no impairment losses in previous years.

Asset	Cost	Accumulated Depreciation	Carrying Value	Recoverable Amount	Impairment	Revised Carrying Amount
	[A]	[B]	[C = A-B]	[D]	[E = C-D]
Equipment	$63,000	$39,440	$23,560	$6,160	$17,400	$6,160
Furniture	$30,000	$25,169	$4,831	$5,650	NA	$4,831
Land	$103,000	NA	NA	$119,800	NA	$119,800
Office Buildings	$113,000	$39,200	$73,800	$70,500	$3,300	$70,500
Warehouse	$82,000	$30,938	$51,062	$63,100	NA	$51,062

Prepare entry as follows:

Account Titles	Debit	Credit
Impairment Loss	$20,700
Equipment		$17,400
Office Buildings		$3,300

____________________________________________________________

2. Record depreciation for each asset at December 31, 2021. Assume that there was no change in the residual values or useful lives regardless of any impairment losses that might have occurred.

Working as follows:

Equipment [Carrying Value as on 31-3-2020] Units Produced Total Units [56160 x 2700 units] 8800 units =$1890 Furniture=Carrying value x 25% 1 = $4831x x2 8 year = $4831x25% = $1207.75

Carrying value-Residual value Office Building= Remaining life $70500-$33200 10 years = $3730 Carrying value-Residual value Warehouses Remaining life $51062-$28000 15 year's =$1537.46

Account Titles	Debit	Credit
Impairment Loss	$20,700
Equipment		$17,400
Office Buildings		$3,300
Depreciation	$8,365.20
Equipment		$1,890
Furniture		$1,207.75
Office Building		$3,730
Warehouse		$1,537.45