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iHeartMedia, Inc. in their annual report for the year ending December 31, 2015, state that the plant

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iHeartMedia, Inc. in their annual report for the year ending December 31, 2015, state that the plant assets reported on its balance sheet includes the following:
Plant Asset _____________________________________ Useful Life
Buildings and improvements .................................. 10 to 39 years
Structures ......................................................... 5 to 15 years
Towers, transmitters, and studio equipment ................ 7 to 20 years
Furniture and other equipment ............................... 3 to 20 years
Depreciation is computed using the straight-line method.
Requirements
1. Suppose iHeartMedia, Inc. purchases a new advertising structure for $100,000 on August 1. The residual value of the structure is $4,000 and the useful life is 10 years. How would iHeartMedia record the depreciation expense on December 31 in the first year of use? What about the second year of use?
2. What would be the book value of the structure at the end of the first year? What would be the book value of the structure at the end of the second year?
3. What would be the impact on iHeartMedia, Inc. financial statements if they failed to record the adjusting entry related to the structure?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Requirement 1 Date Accounts and Explanation Debit Credit Year 1 Dec 31 Depreciation ExpenseStructure ...View the full answer


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Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.

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