Maju Jaya is a manufacturing company that has been operating for the last 30 years. The company's oldest manufacturing equipment is still in a good, operating condition. The equipment was bought 15 years ago at a cash price RM2 million. The useful life of the equipment is 20 years while its residual value is set at 10% of its original cost. Maju Jaya uses straight line method to depreciate all manufacturing equipment. For the past three years, Maju Jaya has decided to evaluate the manufacturing equipment for impairment. Maju Jaya estimates that the equipment has a remaining useful life of 15 years. In addition, it is also estimated that the nett cash inflow from the equipment will be RM10,000 per year. Meanwhile, the fair value of the equipment is estimated at RM630,000. Required: (a) Determine the amount of impairment loss. (b) Provide the journal entry for the above transaction if an impairment loss is recognized. (c) Assume that the fair value of the equipment is determined at RM1.5 million. Explain how

Maju Jaya is a manufacturing company that has been operating for the last 30 years. The company's oldest manufacturing equipment is still in a good, operating condition. The equipment was bought 15 years ago at a cash price RM2 million. The useful life of the equipment is 20 years while its residual value is set at 10% of its original cost. Maju Jaya uses straight line method to depreciate all manufacturing equipment. For the past three years, Maju Jaya has decided to evaluate the manufacturing equipment for impairment. Maju Jaya estimates that the equipment has a remaining useful life of 15 years. In addition, it is also estimated that the nett cash inflow from the equipment will be RM10,000 per year. Meanwhile, the fair value of the equipment is estimated at RM630,000. Required: (a) Determine the amount of impairment loss. (b) Provide the journal entry for the above transaction if an impairment loss is recognized. (c) Assume that the fair value of the equipment is determined at RM1.5 million. Explain how

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Description: Maju Jaya is a manufacturing company that has been operating for the last 30 years. Thecompany's oldest manufacturing equipment is still in a good, operating condition. Theequipment was bought 15 years ago at a cash price RM2 million. The useful lif

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 15PB: Urquhart Global purchases a building to house its administrative offices for $500,000. The best...

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Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $85,400. The machine's useful life is estimated at 20 years, or 402,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 34,200 units of product. Determine the machine's second-year depreciation and year end book value under the straight-line method. Choose Numerator: / Cost minus salvage $ Year 2 Depreciation Year end book value (Year 2) Straight-Line Depreciation 80,400 / Choose Denominator: / Estimated useful life (years) 20 = = = Annual Depreciation Expense Depreciation expense $ 4,020