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Question (Category: accounting)
problem: 18-8a herron realty company owns a number of large office bldgs in several cities in u.s.. oe of its buildings is 16 yrs. old and has had a large number of vacant offices suites in several years. the building's book value is $13 million. the company has examed carefully its cash flows and has determined that it is highly unlikely that the company can recover the buildings book value from the future cash flows. further study in 11 2010 has resulted in 3 estimates of the market value of the building. all estimates of value were approx. $8.2 million. 1. should herron record impairment of the building? why? 2 if impairment should be recorded, what is the amount? 3. what accounting entry ould be necessary based on the above facts? 4. if ijpairment is recorded in 2010 and the value of the building increases in 23011 so that the market value exceeds the book value, should the book value of the building be increase in time? how could the compnay uses its estimates of cash flows to arrive at the market value of the building? student name: problem: 18-7a mayfair mining company had a total depletable capitalized cost of $656,000 for a mine acquired in early 2010. it was estimated that the mine contained 820.000 tons of recoverable ore when production began. during 2010, 20,500 tons were mine, and 41,000 tons were mined in 2011. 1. compute a depletion expense in 2010 and 2011 for financial acoounting purposes. what accounts will be debited and credited to record depletion? 2. a. in 2010, 20,500 tons of ore were sold for $2,050,000. for tax purposes, operating expenses of the mine were $500,000. the taxpayer may deduct either cost depletionor percentage depletion, which for the type ore produced 8% of production sold from mine? auume that percentage depletion is limited to the amount of net income from the property. what would be amount of depletion allowable in 2010? b. what would be the amount of cost de4pletion allowable for tax purposes in 2010, assuming that capitalized mineral costs are the same for tax purposes as for financial accounting? c. what will be the amount of depletion based on cost that the company could deduct on its tax return in 2011 if it deducts percentage depletion in 2010? d. suppose in the first 3 years of mine's life. the company took % depletion totaling $654.000. th the 5th year of the mine's life, production proceeds were $4,300,000. how much percentage depletion of cost of mineral?


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