Year
1 59,375$ (1) 125,000$ (3)
(1)
(2)
$950,000 ÷ 8 1/2 = $59,375
$950,000 ÷ 8 = $118,750
b.
200% Declining-Balance
(Half-Year Convention)
a.
Straight-Line
(Half-Year Convention)
Ex. 9.3
Ex. 9.4
Book
Year Value
2015 $7,000 $7,000 $ 33,000
Depreciation
Expense
Accumulated
Depreciation
a. (1) Straight-Line Schedule
Computation
$35,000 x 1/5
Ex. 9.5 a.
No, the use of different depreciation methods in financial statements and in
income tax returns does not violate the accounting principle of consistency.
The principle of consistency means that a company does not change from
year to year the method used to depreciate a given asset. This principle does
Ex. 9.6 a. 2011
Jan. 11 90,000
Cash ……………………………………
…
90,000
To record purchase of machinery.
Machinery ……………………………………
…
Ex. 9.8 540,000$
Average earnings ………………………………………………………
…
Ex. 9.11 a. Inventory ……………………………………………… 400,000
400,000
Accumulated Depletion: Northern Tier Mine
To record depletion on the Northern Tier Mine:
50,000 tons mined × $8 per ton [($21,000,000 −
Ex. 9.14 a.
The depreciation rate per mile is calculated as follows:
$26,500 – $4,800/(18,000 x 5 years) = $0.24 per mile
Depreciation for the first two years is calculated as follows:
a.
(2)
(3)
SOLUTIONS TO PROBLEMS SET
A
PROBLEM 9.1
A
HAMLET COLLEGE
Freight charges are part of the cost of getting the equipment to a usable location and,
therefore, are part of the cost of the equipment.
25 Minutes, Easy
The cost of plant and equipment includes all expenditures that are reasonable and necessary
Sales tax is a reasonable and necessary expenditure in the purchase of plant assets and
is included in the cost of the equipment.
c.
PROBLEM 9.1
A
HAMLET COLLEGE (concluded)
Expenditures that should be debited to the
Book
Year Value
2012 $ 10,000 $10,000 $98,000
Book
Year Value
2012 $21,600 $21,600 $86,400
Book
Year Value
2012 $16,200 $16,200 $91,800
2013 27,540 43,740 64,260
Depreciation
Expense
Accumulated
Depreciation
Depreciation
Expense
Computation
(2) 200% Declining-Balance Schedule:
Computation
Computation
$100,000 x 1/5 x 1/2
PROBLEM 9.2
A
45 Minutes, Medium
SWANSON & HILLER, INC.
Accumulated
Depreciation
a. (1) Straight-Line Schedule:
Depreciation
Expense
$108,000 x 30% x 1/2
91,800 x 30%
(3) 150% Declining-Balance Schedule:
$108,000 x 40% x 1/2
Accumulated
Depreciation