What should be the new carrying value of the equipment

Reference no: EM131975520

Problem

The service units approach is most appropriate for impairments caused by technological obsolescence Clarkstown State University acquired specialized laboratory equipment with the expectation that it would be used to perform approximately 3,000 tests per year over a 10-year period. The cost was $600,000. After the equipment had been used for only three years and was 30 percent depreciated, the university realized that the machine would likely be used to perform only 500 tests per year over the following seven years owing to the introduction of more efficient equipment.

1. What should be the new carrying value of the equipment?
2. How much of an impairment loss should the university recognize?

Reference no: EM131975520

Questions Cloud

What is the expected growth rate of the company dividend : A firm just paid an annual dividend of RM0.50 and it is expected to grow at a constant rate forever.The price of the company's common stock is currently.

How much should you set aside per year to meet goal : If you think your portfolio will make a return of 5% on average, how much should you set aside per year to meet your goal?

How much debt can the firm issue in the coming year : If the firm wants to maintain its same debt-to-equity ratio, how much debt can the firm issue in the coming year IF the firm will not issue any new shares?

What is firm approximate weighted average cost of capital : A firm is partly debt financed with 4 year bonds that all pay a 7% annual coupon. The total book value of the debt is $5 million with $1,000 par value per bond.

What should be the new carrying value of the equipment : The service units approach is most appropriate for impairments caused by technological obsolescence. What should be the new carrying value of the equipment?

What is the npv of the project if the discount rate : After year 3, the cash flows will increase by 2% per year forever. What is the NPV of the project if the discount rate is 14%?

What is seymours depreciable basis for the property : Seymour Scagnetti bought an apartment building for $180,000 and rented all of the units out to tenants. What is Seymour's depreciable basis for the property?

How much worse off would firm be : Your firm has a monthly ledger balance of $2,000,000 and deposit float of $500,000. The First Bank of Clinton offers your firm an earnings credit rate of 0.60%.

Determine the number of lollipops that must be sold : The Variable Costs were $350,000 and the Net Profits were $100,000. Determine the Number of lollipops that must be sold to reach this target

User Account

All Pages