EXERCISE 9-10 (Continued)
(c) Cash ………………………………………………………………… 11,000
Accumulated Depreciation—Equipment ……………… 36,000
(d) Depreciation Expense
Cash ………………………………………………………………… 11,000
Accumulated Depreciation—Equipment
EXERCISE 9-11
(a) Dec. 31 Depletion Expense …………………………….. 80,000
Cost (a) $720,000
EXERCISE 9-12
Dec. 31 Amortization Expense ……………………………. 10,000
EXERCISE 9-13
1/2/15 Patents …………………………………………………. 595,000
4/1/15 Goodwill ……………………………………………….. 360,000
(Part of the entry to record
purchase of another company)
7/1/15 Franchises ……………………………………………. 480,000
9/1/15 Research and Development Expense ……… 185,000
12/31/15 Amortization Expense
($595,000 ÷ 7) + [($480,000 ÷ 10) X 1/2] … 109,000
Ending balances, 12/31/15:
Patents = $510,000 ($595,000 – $85,000).
EXERCISE 9-14
Asset turnover ratio =
$3,500,000
$1,400,000
= 2.5 times
*EXERCISE 9-15
(a) Equipment (new) …………………………..…………………… 55,000
Accumulated Depreciation—Equipment (old) ……… 22,000
Cost of old trucks $64,000
Less: Accumulated depreciation 22,000
Book value 42,000
(b) Equipment (new) …………………………..…………………… 14,000
Accumulated Depreciation—Equipment (old) ……… 4,000
Cost of old machine $12,000
Less: Accumulated depreciation 4,000
Book value 8,000
*EXERCISE 9-16
(a) Equipment (new) ………………………………………………. 3,000
Loss on Disposal of Plant Assets ………………………. 4,000
Accumulated Depreciation—Equipment (old) …….. 15,000
(b) Equipment (new) ………………………………………………. 3,000
Cost of old truck $10,000
Less: Accumulated depreciation 8,000
*Fair value of old truck
SOLUTIONS TO PROBLEMS
PROBLEM 9-1A
Item
Land
Buildings
1
2
3
4
5
6
7
8
9
10
($ 4,000)
( 145,000)
( 2,000)
( 25,000)
(3,500)
($172,500)
$690,000
35,000
10,000
$735,000
PROBLEM 9-2A
(a)
Year
Computation
Accumulated
Depreciation
12/31
BUS 1
2013
2014
2015
$ 90,000 X 20% = $18,000
$ 90,000 X 20% = $18,000
$ 90,000 X 20% = $18,000
$18,000
36,000
54,000
BUS 2
2013
2014
2015
$110,000 X 50% = $55,000
$ 55,000 X 50% = $27,500
$ 27,500 X 50% = $13,750
$55,000
82,500
96,250
BUS 3
2014
2015
24,000 miles X $.70* = $16,800
34,000 miles X $.70* = $23,800
$16,800
40,600
*$84,000 ÷ 120,000 miles = $.70 per mile.
(b)
Year
Computation
Expense
BUS 2
(1)
(2)
2013
2014
$110,000 X 50% X 9/12 = $41,250
$68,750 X 50% = $34,375
$41,250
$34,375
PROBLEM 9-3A
(a) (1) Purchase price ……………………………………………………….. $ 48,000
Sales tax ………………………………………………………………… 1,700
Shipping costs ……………………………………………………….. 150
Equipment ………………………………………………….. 50,000
(2) Recorded cost ………………………………………………………… $ 50,000
Depreciation Expense ………………………………….. 9,000
Accumulated Depreciation—Equipment …. 9,000
(b) (1) Recorded cost ………………………………………………………… 180,000
Less: Salvage value ……………………………………………….. 10,000
(2)
Book Value at
Beginning
of Year
DDB
Rate
Annual Depreciation
Expense
Accumulated
Depreciation
$180,000
90,000
45,000
22,500
*50%*
*50%*
*50%*
*50%*
$90,000
45,000
22,500
12,500**
$ 90,000
135,000
157,500
170,000
PROBLEM 9-3A (Continued)
$1.36 per unit.
Annual Depreciation Expense
2015: $1.36 X 45,000 = $61,200
lowest.
These facts occur because the declining-balance method is an acceler-
ated depreciation method in which the largest amount of depreciation
The amount of depreciation expense recognized using the units–of-activity
PROBLEM 9-4A
Year
Depreciation
Expense
Accumulated
Depreciation
2013
2014
2015
2016
2017
2018
2019
(b)$18,000(a)
18,000
(b)14,400(b)
14,400
14,400
17,900(c)
17,900
$18,000
36,000
50,400
64,800
79,200
97,100
115,000
(a)
$120,000 – $12,000
6 years
= $18,000
(b)
Book value –Salvage value
Remaining useful life
=
$84,000 – $12,000
5 years
= $14,400
(c)
$40,800 – $5,000
2 years
= $17,900
PROBLEM 9-5A
(a) Apr. 1 Land…………………………………………. 2,130,000
May 1 Depreciation Expense ……………….. 25,000
1 Cash ………………………………………… 450,000
Accumulated Depreciation—
Cost $750,000
Accum. depreciation—
equipment 325,000
June 1 Cash ………………………………………… 1,500,000
July 1 Equipment ………………………………… 2,500,000
Dec. 31 Depreciation Expense ……………….. 50,000
31 Accumulated Depreciation—