1. On February 15, 2020, Stark Industry sold its branch factory, which was used to produce automobile, to Avengers Corporation, a Chinese company. At that date, Stark Industry publicly announces that its branch factory will be closed in the end of 2020, and communicate to its customers about after-sales services, such as repairmen and maintenance service, annual vehicle inspection service, will be available and still in operation. After an announcement has been published, Stark Industry starts to give a big discounts promotion, up to 50 percent, to customers. During 2019, Starload Company had made a vehicle purchase from Stark Industry. On February 15, 2020, the same date with Stark publicly announced to shut down its branch factory, Starload's vehicle has carrying amount $950,000  (Initial cost is of $1,000,000 and Accumulated depreciation is of $50,000 ).

Required:

1) Explain all indication of impairment. 

2) Explain how does Starload test impairment of its vehicle. 

3) Prepare the essential journal entry relating to this matter. 

2. On December 31, 2019, Steve Roger Company's statement of financial position stated $1,000,000 of accounts receivable and $200,000  of allowance for doubtful accounts. On December 31, 2020, this amount of accounts receivable has not been settled, Steve Roger Company determines to increase allowance for doubtful accounts to be $350,000. By the way, the Revenue Department only allows doubtful debt expenses, if they will be in range of Revenue Codes. Unfortunately, Steve Roger Company does not press the payment from receivables in the previous year. On December 31, 2018, Steve Roger Company also purchased $1,200,000  of vehicle. This vehicle had 10 years of useful life, and the company has applied straight-line method for its depreciation. According to Revenue Codes, all companies must apply the depreciable rate following this table:

Type of assets                                                                          Depreciable rate

Buildings and Plants                                                                             5% 

Other assets. For example, computers, cars etc.                         20%

Moreover, on December 2020, Steve Roger Company reported $475,000 of income before tax expense.

 Required: (Assume tax rate is 20%)

1) Compute the carrying amount and taxable base in 2020.  

2) Compute the temporary difference and the amount of deferred taxes recognized in 2020. 

3) Prepare the essential journal entries on December 31, 2020.