Chapter 3
Long-Term Assets
136
b) Calculate the recoverable amount of the machinery on December 31, 2018.
Analysis
How might AIT Company determine the recoverable amount of the machinery at December
31, 2018? Does the company need to test the assets for impairment every year?
AP-23B (
7
)
The following financial data is given for two companies, LIN andWOK. They both manufacture
and sell office furniture across the US and Canada. Both companies have a year-end of June 30.
LIN Company
June 30, 2015 June 30, 2014
Net Sales
$3,500,000
$3,000,000
Total Assets
$2,200,000
$1,150,000
Net Income
$590,000
$500,000
Gross Profit
$1,575,000
$1,350,000
WOK Company
June 30, 2015 June 30, 2014
Net Sales
$4,500,000
$4,120,000
Total Assets
$5,500,000
$4,800,000
Net Income
$840,000
$620,000
Gross Profit
$1,575,000
$1,442,000
