Question 1: Using the following data and the straight-line method of depreciation, compute depreciation expense, and make the necessary journal entry to record depreciation expense for the first year.
Cost of machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Estimated useful life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 years
Salvage value . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Estimated useful life (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600,000
Units produced during the first year .
Question 2: The company purchased a building 14 years ago for $720,000. The building has accumulated depreciation of $504,000 and a fair market value of $150,000. The company expects the building will generate a net cash inflow of $30,000 per year for the next six years. Determine whether, from an accounting point of view, the building is impaired.
Question 3: The company scrapped a truck with a historical cost of $60,000 and accumulated depreciation of $48,000. In addition, the company had to pay $500 to discard the truck. Make the necessary journal entry(ies) to record this transaction.