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Use the following information for questions 32 and 33. On January 1, 2018, Fredrichs Inc. purchased equipment with a cost of 3,060,000, a useful life of 12 years and no salvage value. The company uses straight-line depreciation. At December 31, 2018, the company determines that impairment indicators are present. The fair value less cost to sell the asset is estimated to be 2,600,000. The assets value-in-use is estimated to be 2,365,000. There is no change in the assets useful life or salvage value

32. The 2018 income statement will report Loss on Impairment of a. 0. b. 205,000. c. 440,000. d. 460,000.

33. The 2019 (second year) income statement will report depreciation expense for the equipment of a. 216,667. b. 236,364. c. 255,000. d. 260,000.

34. On January 1, 2019, W. Poon Inc. purchased equipment with a cost of HK$4,668,000 a useful life of 12 years and no salvage value. The company uses straight-line depreciation. At December 31, 2019, the company determines that impairment indicators are present. The fair value less cost to sell the asset is estimated to be HK$4,620,000. The assets value-in-use is estimated to be HK$4,305,000. There is no change in the assets useful life or salvage value. The 2019 income statement will report Loss on Impairment of a. HK$0. b. HK$26,000. c. HK$48,000. d. HK$341,000.

35. On January 2, 2018, Q. Tong Inc. purchased equipment with a cost of HK$10,440,000, a useful life of 10 years and no salvage value. The Company uses straight-line depreciation. At December 31, 2018 and December 31, 2019, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end: 12/31/2018 12/31/2019 Fair value less cost to sell HK$9,315,000 Hk$8,350,000 Value-in-use HK$9,350,000 HK$8,315,000 There is no change in the assets useful life or salvage value. The 2019 income statement will report a. Recovery of Impairment Loss of HK$3,889. b. Impairment Loss of HK$10,000. c. Recovery of Impairment Loss of HK$38,889. d. Impairment Loss of HK$1,000,000.

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