intermediate Accounting Problem

TRADITIONAL HOMEWORK ITEMS – Spring 2024 – ACT 3391General Instructions for the Traditional Homework – refer to the instructions for traditional item nos. 1 to 3.
30. (3 points) Leia Company purchased a machine for $1,280,000 on January 1, 2014. Leia estimates the machine will have a fiveyear useful life, salvage value of $80,000, and production capability of 3,600,000 units of a product called Hoosier. During 2014,
Leia’s machine produced 900,000 units of Hoosier. Compute Leia’s depreciation for 2014 assuming she uses the following
depreciation methods:
a. Straight-line
b. Units-of-production
c. Double-declining balance
31. (3 points) Evan Company purchased a machine for $750,000 on April 01, 2010. Evan estimates the machine will have a six-year
useful life and a salvage value of $30,000. Evan calculates depreciation for a year to the nearest full month. Compute Evan’s
depreciation for 2012 assuming he uses the double-declining balance method of depreciation.
32. (3 points) Evan Company purchased a machine for $2,500,000 on January 1, 2019. Evan estimates the machine will have a fiveyear useful life and no salvage value. Evan uses a straight-line depreciation method. On December 31, 2021, economic conditions
suggested that Evan’s machine had become impaired. Evan estimates that expected future cash flows from using the equipment will
be $725,000 and the fair value of the machine is $740,000. Evan intends to use the machine in 2022 and then dispose of it.
a. Prepare the entry (if any) Evan should make on 12-31-21 for impairment.
b. Prepare any entry (entries) Evan should make on 12-31-22 relating to using the machine.
33. (3 points) Haven Company purchased Trey Company for $800,000. Trey’s balance sheet as of the date of the purchase follows:
Cash
Receivables from customers, net
Inventory
Plant assets, net
$ 31,000
49,000
65,000
210,000
$355,000
Accounts payable
Other current accrued liabilities
Notes and bonds payable
Common stock ($1 par value)
Additional paid-in-capital, common stock
Retained earnings
10,000
15,000
100,000
40,000
60,000
130,000
$355,000
The fair values of Trey’s assets and liabilities equaled their book values EXCEPT for the following:
Inventory fair value = $150,000
Plant assets fair value = $440,000
Notes and bonds payable = $110,000
Also, Trey owned a patent that Trey had developed in the past. Haven estimated the fair value of the patent to be $150,000.
What amount of goodwill should Haven record for the purchase of Trey?
1