Reference no: EM133092188

Questions -

Q1. Due to the rapid change in technology, a super computer with an original cost of $80 million and accumulated depreciation on January 1, Year 5, of $40 million had suffered permanent impairment, and as a result should have a carrying value of only $26 million as of January 1, Year 5. In addition, the remaining useful life of the super computer was reduced from 6 to 2 years. Assuming straight-line depreciation, what amount should be reported as accumulated depreciation on December 31, Year 5?

$53 million

$50 million

$67 million

$54 million

Q2. The pandemic which caused United Airlines to ground most of its airplanes in 2020 prompted United Airlines to assess whether their fleet of aircraft was impaired. The cost of United's aircraft was $150 billion, and accumulated depreciation was $60 billion. United estimated undiscounted future cash flows in terms of fare revenue to be provided by their fleet of aircraft to be $95 billion, the estimated discounted future cash flows of this amount is $80 billion and the fair value is $78 billion. How much should United Airlines record the impairment loss?

$12 billion

$0

$17 billion

$10 billion

Q3. HiTech Inc. has an anti-hacker software that reached technological feasibility on August 1, 20X1, and was ready for release to customers on January 6, 20X2. Development costs incurred prior to August 1, 20X1, were $3,800,000, and costs incurred from August 1, 20X1 to the release date were $1,200,000. The economic life of the software is estimated at five years. HiTech estimates revenues from the sale of the new software to be $2,500,000 in 20X2, and additional revenues of $7,500,000 in the remaining years. Compute amortization of the software development costs for the year 20X2.

$240,000

$400,000

$1,000,000

$300,000