Part 4: Reporting & Interpreting Property, Plant & Equipment

Subpart 1:

Harsco Corporation purchased equipment on January 1, 2022 costing $680,000. The equipment has an estimated an useful life of eight (8) years, is expected to produce 400,000 units, and has an estimated residual value of $40,000.

Required:

Calculate depreciation expense to the nearest whole dollar for 2023 (the second year) of the machine's useful life under:

1. Double declining-balance method. Answer: _________________
2. If the machine was used to produce and sell 58,000 units in 2022 and 64,000 units in 2023, what would be the depreciation expense for 2023 using the units-of-production method? Answer: ___________________

Subpart 2:

A company purchased equipment for $650,000 and has depreciated it using the straight-line method for the past 5 years when its original life was estimated to be 10 years with a $50,000 residual value. The equipment's utility to the company has declined because management expects the equipment to generate net undiscounted cash flow over the remaining years of $285,000. The fair value of the assets at the end of the fifth year was $225,000.

Required: If the asset has been impaired, record the journal entry to record the impairment.

General Journal	Debit	Credit