Ethics Challenge — BTN 8-3
1. When managers acquire new assets a number of decisions relative to
2. When assets are placed in use on a day other than the first day of the
month an assumption is often made that the assets are placed in use on
the first day of the month nearest to the date of the purchase. For
example, for assets purchased on the 1st through 15th days of the month,
3. By always assuming the first day of the following month as the date of
purchase, less depreciation is (initially) accrued for the assets
employed. This means depreciation expense will be less than if assets
were considered employed on the first of the month closest to the date
Taking It to the Net — BTN 8-5
1. Yahoo! has Goodwill in the amount of ($ thousands) $4,679,648 at
2.
Goodwill (in $ thousands)
Total
Amount
$ Change
from Prior
Year
%
Change
Balance, December 31, 2012 ……………..…
$3,826,749
Balance, December 31, 2013 ……………..…
$4,679,648
$852,899
22.3%
Goodwill has increased over this period. The increase is due mainly to
new goodwill recorded due to acquisitions in 2013 and, secondly, to
Foreign Currency Translation Adjustments that Yahoo! has experienced
over this period. There was also a goodwill impairment.
3. Yahoo!’s intangible assets are categorized into the three categories
below at December 31, 2013. These intangibles represent 2.5%
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Financial and Managerial Accounting, 6th Edition
498
Teamwork in Action — BTN 8-6
1. Annual depreciation for each year of the asset’s useful life:
Year
Straight-line
Double-Declining-Balance
Units-of-Production
2013
($44,000-$2,000)/4
= $10,500
(100%/4) x 2 = 50% is
declining-balance rate.
BV x rate = $44,000 x 50%
= $22,000
($44,000-$2,000)/60,000 miles
= $.70 per mile.
12,000 miles x $.70 = $ 8,400
2014
$10,500
$22,000 x 50%= $11,000
18,000 miles x $.70 = $12,600
2015
$10,500
$11,000 x 50% = $5,500
21,000 miles x $.70 = $14,700
2016
$10,500
$5,500 (depreciate to
salvage) = $3,500
9,000* miles x $.70 = $ 6,300
* Depreciation is based on the estimated capacity of 60,000 miles. Even though the van is
driven 10,000 miles in the last year, depreciation can only be taken for the remaining 9,000
miles of estimated capacity. This will record depreciation to the estimated salvage value.
2. Depreciation is recorded in an adjusting entry at the end of each
period. The entry is:
3. Each expert’s presentation of the comparison of methods will be
slightly different. The experts should make the following points: The
driven).
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Solutions Manual, Chapter 8
499
Teamwork in Action — BTN 8-6 – continued
4. Book value at the end of each year
= Cost – Accumulated depreciation
= $44,000 – (amount varies by method—see part 1 for annual amounts)
Year
Straight–line
Double–Declining–
Balance
Units of Production
2013 ……..
$33,500
$22,000
$35,600
2014 ……..
23,000
11,000
23,000
2015 ……..
12,500
5,500
8,300
2016 ……..
2,000
2,000
2,000
For reporting purposes, each expert will have different results. But
each should show:
Plant Assets:
Transport Van ……………………………………………………. $44,000
Less: Accumulated Depreciation ………………………… XXXX*
XXXX*
* Amounts vary by the method and the year selected for illustration. Experts should explain
the amounts shown.
Entrepreneurial Decision — BTN 8-7
Part 1
(a) Under current conditions, the total asset turnover is 3.2. This is
computed as net sales of $8,000,000 divided by its average total assets
sales per year.
Part 2
The proposal would yield an improved total asset turnover of 4 vis-à-vis the
current total asset turnover of 3.2. However, we need to recognize that this
proposal depends on our confidence in both maintaining current sales,
meeting future sales expectations, and not losing or alienating current
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Solutions Manual, Chapter 8
501
Hitting the Road — BTN 8-8
No formal solution exists for this activity. It is usually interesting for the
class to exchange their discoveries via class discussion. This is
particularly the case with respect to patents, copyrights, and trademarks.
Global Decision — BTN 8-9
Note: Total asset turnover = Net sales / Average total assets
1. Total asset turnover for Samsung (KRW in millions):
2. Samsung was more efficient in using its assets to generate net sales
than Google and Apple. Specifically, in the current year, each KRW
₩228,692,667
(₩181,071,570 + ₩155,800,263)/2