Title: Problem 10-8A
QA_Ori:
1.
2013 (a)
(b)
(c)
July 5 Leasehold Improvements………………………………………..130,000
Cash………………………………………………………………. 130,000
To record costs of leasehold improvements.
2.
2013 (a)
(b)
Dec. 31 Amortization Expense—Leasehold Improvements……………..6,500
(c)
Dec. 31 Rent Expense………………………………………………………..40,000
Title: Problem 10-1B
Part 1
Estimated
Market Value
Percent
of Total
Apportioned
Cost
Building………………………. $ 890,000 50% $ 900,000
2013
Jan. 1 Buildings…………………………………………………………………900,000
Part 2
Year 2013 straight-line depreciation on building
Part 3
Year 2013 double-declining-balance depreciation on land improvements
Part 4
Accelerated depreciation does not increase the total amount of taxes paid over the
asset’s life. Instead, it defers or postpones taxes to the later years of an asset’s
From a present value perspective, there is a tax savings from use of accelerated
Title: Problem 10-2B
QA_Ori:
Part 1
Land
Building
B
Building
C
Land
Improve-me
nts B
Land
Improve-
ments C
Purchase price*………….$ 868,000 $527,000 $155,000
Demolition………………… 122,000
Allocation of
purchase price
Appraised
Value
Percent
of Total
Apportioned
Cost
Land……………..……………………… $ 795,200 56% $ 868,000
Part 2
2013
Jan. 1 Land………..………….….………….….………….….….………. 1,164,500
Building B…………………….….……………………………….. 527,000
Part 3
2013
Dec. 31 Depreciation Expense—Building B……………………………………..
……………………………………………………………………………………….
……………………………………………………………………………………….
28,500
31 Depreciation Expense—Building C………………………….60,000
31 Depreciation Expense–Land Improvements B…………..
31,000
31 Depreciation Expense–Land Improvements C…………..
……………………………………………………………………………
10,350
Title: Problem 10-3B
QA_Ori:
2012 Equipment…………………………………………………………….27,670
Jan. 3 Equipment……………………………………………………………. 1,850
Dec. 31 Depreciation Expense—Equipment…………………………. 5,124*
*2012 depreciation after January 3rd betterment
Total original cost………………………………………………………………..$27,670
2013
Jan. 1 Equipment……………………………………………………………. 2,064
May 10 Repairs Expense—Equipment………………………………… 800
Dec. 31 Depreciation Expense—Equipment…………………………. 3,760
*2013 depreciation after 1/1 extraordinary repair
Total cost ($29,520 + $2,064)….…………………………………………………………………..$31,584
Title: Problem 10-4B
QA_Ori:
2012
Jan. 1 Machinery……………………………………………………………..114,270
Dec. 31 Depreciation Expense—Machinery…………………………..17,425
2013
Dec. 31 Depreciation Expense—Machinery…………………………..27,500*
*2013 depreciation:
Total cost…………………………………………………………………………….$114,270
Less accumulated depreciation (from 2012)…………………………… 17,425
2014
Dec. 31 Depreciation Expense—Machinery…………………………..27,500
Dec. 31 Cash……………………………………………………………………. 25,240
**Accumulated depreciation on machine at 12/31/2014:
2012 $ 17,425
Title: Problem 10-5B
QA_Ori:
Cost of machine………………..………..………………………….$324,000
Year Straight-LineaUnits-of-Productionb
Double-Declining-
Balancec
1……………….. $ 58,800 $ 71,120 $129,600
2……………….. 58,800 64,080 77,760
aStraight- line:
Cost per year = $294,000/5 years = $58,800 per year
bUnits-of-production:
Cost per unit = $294,000/1,470,000 units = $0.20 per unit
Year Units Unit Cost Depreciation
1…………… 355,600 $0.20 $ 71,120
2…………… 320,400 0.20 64,080
* Take only enough depreciation in Year 5 to reduce book
cDouble-declining-balance (amounts rounded to the nearest dollar):
Year
Beginning
Book Value
Annual
Depreciation
(40% of
Book Value)
Accumulated
Depreciation
at the End of
the Year
Ending Book Value
($324,000 Cost less
Accumulated
Depreciation)
1………… $324,000 $129,600 $129,600 $194,400
2………… 194,400 77,760 207,360 116,640
* rounded
Title: Problem 10-6B
QA_Ori:
1.
Jan. 1 Machinery………………………………………………………….. 150,000
Cash……………………………………………………………. 150,000
To record machinery costs.
2. a. First year
Dec. 31 Depreciation Expense—Machinery…………………………..20,000
b. Sixth year
Dec. 31 Depreciation Expense—Machinery…………………………..20,000
3. Accumulated depreciation at the date of disposal
First six years’ depreciation (6 x $20,000)……………………..$120,000
a. Sold for $28,000 cash
Dec. 31 Cash…………………………………………………………………….28,000
b. Sold for $52,000 cash
Dec. 31 Cash…………………………………………………………………….52,000
c. Destroyed in fire and collected $25,000 cash from insurance
Dec. 31 Cash…………………………………………………………………….25,000
Title: Problem 10-7B
a.
Feb. 19 Mineral Deposit……………………………………………………..5,400,000
b.
Mar. 21 Machinery……………………………………………………………..400,000
c.
Dec. 31 Depletion Expense—Mineral Deposit………………………..342,900
Accum. Depletion—Mineral Deposit……………………. 342,900
d.
Dec. 31 Depreciation Expense—Machinery…………………………..25,400
Accum. Depreciation—Machinery………………………. 25,400
QA_Ori: Analysis Component
Similarities—Amortization, depletion, and depreciation are similar in that they are
Differences—They are different in that they apply to different types of long-term