18. ACY Limited (“ACY”) acquired a machine for $500,000 on 1 January 2018 with a useful life of 5 years and zero residua
Posted: Sat May 07, 2022 7:39 pm
18.
ACY Limited (“ACY”) acquired a machine for $500,000 on 1 January
2018 with a useful life of 5 years and zero residual value.
Straight-line depreciation method is adopted. As at 31
December 2018, it is determined that impairment indicators of the
machine exist. Value in use is estimated as $300,000 while
the fair value less costs to sell is around
$260,000.
Question
Had “sum-of-the-years’-digits depreciation method” was adopted
by ACY, which one of below correctly describe the changes in
results for year 2018 (comparing to the case when straight-line
depreciation method is used):
Select one:
A.
Yes. Total expenses shall increase by $166,667 for year
2018.
B.
No. Net profit shall remain the same.
C.
No. All expense items shall remain the same.
D.
Yes. Total expenses shall increase by $66,667 for year
2018.
ACY Limited (“ACY”) acquired a machine for $500,000 on 1 January
2018 with a useful life of 5 years and zero residual value.
Straight-line depreciation method is adopted. As at 31
December 2018, it is determined that impairment indicators of the
machine exist. Value in use is estimated as $300,000 while
the fair value less costs to sell is around
$260,000.
Question
Had “sum-of-the-years’-digits depreciation method” was adopted
by ACY, which one of below correctly describe the changes in
results for year 2018 (comparing to the case when straight-line
depreciation method is used):
Select one:
A.
Yes. Total expenses shall increase by $166,667 for year
2018.
B.
No. Net profit shall remain the same.
C.
No. All expense items shall remain the same.
D.
Yes. Total expenses shall increase by $66,667 for year
2018.