Reference no: EM132778368

Yellow cheese co. bought a cheese making machine in jan 1st 2x0. the list price was 120000 but had received a discount of 20000. the delivery cost was 10000. as a policy the company replaces such machines every 10 years. the residual value of this machine was estimated to be 10000. the company uses the straight line method of depreciation for such machines.

Problem a) what is the amount that will appear as the cost of this particular asset on the statement of financial position (balance sheet) of the company for the year ending 2x0? show all calculations along with formulas

Problem b) what is the book value of the asset at the end of the first year? show all calculations and formulae
At the end of the third year the company made an impairment check for this asset. The market experts estimated that the machine could be sold for a net selling price of 85000. Also, they estimated that if they kept using this machine it would bring the company an estimated 90000 in cash flows (net present value)

Problem c) should the company impair this asset? yes or no. Justify your answer by demonstrating your calculation and reasoning
After six years had passed, the company sold the asset for 60000

Problem d) show the journal entries on dec 31 to record the sale. Has the company made any profit or loss from this sale? show any relevant calculations. Make sure you put DR and CR in front of every entry