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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
