Overview
Grupo Televisa, S.A.B. and Subsidiaries (NYSE: TV) in the Notes to Consolidated Financial Statements for the year ending December 31, 2020, states that the property, plant and equipment reported on its balance sheet includes the following:
Plant Asset | Useful Life |
Buildings | 20–65 years |
Technical equipment | 3–30 years |
Satellite transponders | 15 years |
Furniture and fixtures | 3–10 years |
Transportation equipment | 4–8 years |
Computer equipment | 3–6 years |
Depreciation is computed using the straight-line method over the estimated useful lives of the assets shown in the preceding chart. Click Grupo Televisa’s 2021 annual report Download Grupo Televisa’s 2021 annual report.
Requirements
- 1. Suppose Grupo Televisa purchases new technical equipment for $100,000 on August 1. The residual value of the equipment is $4,000 and the useful life is 10 years. How would Grupo Televisa record the depreciation expense on December 31 in the first year of use? What about the second year of use?
- What would be the book value of the equipment at the end of the first year? What would be the book value of the equipment at the end of the second year?
- What would be the impact on Grupo Televisa’s financial statements if they failed to record the adjusting entry related to the equipment?