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Question 10
Gei Co. determined that, due to obsolescence, equipment with an
original cost of $900,000 and accumulated depreciation at January 1,
2004 of $420,000 had suffered permanent impairment, and as a result
should have a carrying value of only $300,000 as of the beginning of the
year. In addition, the remaining useful life of the equipment was reduced
from 8 years to 3. In its December 31, 2004 balance sheet, what amount
should Gei report as accumulated depreciation?
Question 11
Dahl Co. traded a delivery van and $5,000 cash for a newer van owned
by West Corp. Assume there is no commercial substance to the
exchange. The following information relates to the values of the vans on
the exchange date: Dahl's income tax rate is 30%. What amounts should
Dahl report as gain on exchange of the vans?
Question 12
On July 1, 2004, Balt Co. exchanged a truck for 25 shares of Ace Corp.'s
common stock. Assume commercial substance.On that date, the truck's
carrying amount was $2,500, and its fair value was $3,000. Also, the
book value of Ace's stock was $60 per share. On December 31, 2004,
Ace had 250 shares of common stock outstanding and its book value per
share was $50. What amount should Balt report in its December 31,
2004, balance sheet as investment in Ace?
Question 13
On December 31, 2004, a building owned by Carr, Inc. was destroyed
by fire. Carr paid $12,000 for removal and cleanup costs. The building
had a book value of $250,000 and a fair value of $280,000 on December