Expected Life Cost Allocation Warehouse $100 20 years Straight-line Machine 60
Problem 4–4
Redlands Inc. made the following investments on January 1, 2020, its first year of business:
Item Cost Expected Life Cost Allocation
Warehouse $100 20 years Straight-line
Machine 60 10 years Double-declining
Patent 20 5 years Straight-line
Invest in stock* 10 Indefinite Not applicable
* Rancho’s stock had a fair (market) values of $8 and $7 on December 31, 2020 and December 31, 2021, respectively.
Required (A):
1. Present the
2. Report the book values of the long-term assets on the December 31, 2020
Required (B):
1. Compute the gain or loss on the sale of the warehouse if Redlands sold it for $111 on January 1, 2021.
2. Compute the impairment loss on the machine if Redlands determined it had a fair value of $45 on January 1, 2021.
3. Compute 2021 amortization expense for the patent if Redlands determined the patent only had two more years of useful life on January 1, 2021.
4. Report the book values of the long-term assets on the December 31, 2021 balance sheet
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