Julia Corp Has Three Asset Whose Market Values Differ from Their

question 46

Essay

Julia Corp has three asset whose market values differ from their book values.
The market value of the first asset is expected to remain above the book value of Asset #1
for the life of the asset.
The market value of the second asset moves above and below the book value from year to
year.
The market value of the last asset is viewed as a permanent decline below the book value
of the asset.
Required:
A.Make the entry(ies) necessary to record the differences between the market and book values of the assets.
B.If the book values are adjusted to market values what impact will this have on the depreciation of the adjusted asset?

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Definitions:

Replacement Cost

The current cost of replacing an asset with a similar one at its current market price.

Reorganization

A process aimed at restructuring a company's financial or operational aspects for efficiency or to facilitate a smoother operation.

Prepaid Expense

An expense paid in advance and recorded as an asset until it is used or consumed.