Solution-Calculate the book value of each asset

Calculate the book value of each asset

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Question - Axel Company had to following information related to its fixed assets:

	Asset A	Asset B	Asset C
Cost on Jan 1, 2015	$55,000	$88,000	$63,000
Salvage Value	5,000	4,000	3,000
Useful Life	10 years	20 years	15 years
Expected future cash flows	$43,200	$74,800	$52,200
Fair Value, December 31, 2017	$42,500	$73,800	$50,900

Required -

1. Calculate the book value of each asset and determine which assets are impaired. You must show the calculations you used to determine your answer in order to receive credit.

2. What amount of impairment loss will Axel report on December 31, 2017? On which financial statement will Axel report this loss?

3. Assuming that these are the only three depreciable assets that Axel owns, what percent of Axel's assets are used up? Why would this information be of use to a manager?

4. Assuming these are the only three depreciable assets that Axel owns, what is the average useful life of the assets? (Ignore any impairment loss when calculating your answer). Why would a stakeholder be interested in knowing the average useful life of a company's depreciable assets?

Reference no: EM132482842

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Calculate the book value of each asset

Reference no: EM132482842

Reference no: EM132482842

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