In january 20x2 winn corp purchased equipment at a

3
In January 20X2, Winn Corp. purchased equipment at a cost of $500,000.
The equipment had an estimated salvage value of $100,000, an estimated 8-year useful
life, and was being depreciated by the straight-line method. Two years later, it became
apparent to Winn that this equipment suffered a permanent impairment of value.
In January 20X4, management determined the carrying amount should be only
$175,000, with a 2-year remaining useful life, and the salvage value should be reduced
to $25,000.
In Winn's December 31, 20X4, balance sheet, the equipment should be reported at a
carrying amount of:
a) $350,000

b) $175,000
c) $150,000
d) $100,000
d) $100,000
The post-impairment carrying value is $175,000 at the beginning of 20X4. This amount
is the new basis for depreciation. Depreciation in 20X4 is $75,000 [($175,000 −
$25,000)/2].
The revised salvage value is used. After deducting the 20X4 depreciation expense of
$75,000 from the $175,000 beginning book value, the ending 20X4 book value is
$100,000.
4
A state government condemned Cory Co.'s parcel of real estate. Cory will receive
$750,000 for this property, which has a carrying amount of $575,000. Cory incurred the
following costs as a result of the condemnation:
Appraisal fees to support a $750,000 value
$2,500
Attorney fees for the closing with the state
3,500
Attorney fees to review contract to acquire replacement property
3,000
Title insurance on replacement property
4,000
What amount of cost should Cory use to determine the gain on the condemnation?