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PROBLEM 9-5A (Continued)
Cost $500,000
Accum. depreciation—
(b) Dec. 31 Depreciation Expense ..................... 570,000
31 Depreciation Expense ..................... 4,800,000
(c) GRAND COMPANY
Partial Balance Sheet
December 31, 2016
Plant Assets*
Land ..................................................... $ 5,730,000
Buildings .............................................. $28,500,000
Less: Accumulated depreciation—
*See T-accounts which follow.
PROBLEM 9-5A (Continued)
Land
Bal. 4,000,000
Apr. 1 2,130,000
June 1 400,000
Bal. 5,730,000
Buildings
Bal. 28,500,000
Bal. 28,500,000
Accumulated Depreciation—Buildings
Bal. 12,100,000
Dec. 31 adj. 570,000
Bal. 12,670,000
Equipment
Bal. 48,000,000
July 1 2,500,000
May 1 750,000
Dec. 31 500,000
Bal. 49,250,000
Accumulated Depreciation—Equipment
May 1 325,000
Dec. 31 500,000
Bal. 5,000,000
May 1 25,000
Dec. 31 50,000
Dec. 31 adj. 4,800,000
Bal. 9,050,000
PROBLEM 9-6A
(a) Accumulated Depreciation—Equipment .................. 50,000
(b) Cash ............................................................................ 21,000
(c) Cash ............................................................................ 31,000
PROBLEM 9-7A
(a) Jan. 2 Patents ..................................................... 27,000
Jan.– Research and Development
June Expense ............................................... 140,000
Sept. 1 Advertising Expense ............................... 50,000
Oct. 1 Franchises ............................................... 140,000
(b) Dec. 31 Amortization Expense ............................. 10,000
31 Amortization Expense ............................. 5,500
(c) Intangible Assets
Patents ($97,000 cost – $17,000 amortization) (1) ............... $ 80,000
PROBLEM 9-8A
1. Research and Development Expense ................... 136,000
Patents .................................................................... 13,600
Amortization Expense
2. Goodwill .................................................................. 920
Note: Goodwill should not be amortized because it has an indefinite life unlike
Patents.
PROBLEM 9-9A
(a)
LaPorta
Lott
Asset turnover
$1,300,000
$2,500,000
= .52 times
$1,180,000
$2,000,000
= .59 times
PROBLEM 9-1B
Item
Land
Buildings
Other Accounts
1
2
3
4
5
6
7
8
9
10
($ 5,000)
100,000
( 27,000)
( (3,500)
($128,500)
$490,000
19,000
9,000
$518,000
$ 7,500 Property Tax Expense
18,000 Land Improvements
6,000 Land Improvements
PROBLEM 9-2B
(a)
Year
Computation
Accumulated
Depreciation
12/31
MACHINE 1
2012
2013
2014
2015
$100,000 X 10% = $10,000
$100,000 X 10% = $10,000
$100,000 X 10% = $10,000
$100,000 X 10% = $10,000
$ 10,000
20,000
30,000
40,000
MACHINE 2
2013
2014
2015
$180,000 X 25% = $45,000
$135,000 X 25% = $33,750
$101,250 X 25% = $25,313
$ 45,000
78,750
104,063
MACHINE 3
2015
2,000 X ($110,000 ÷ 25,000) = $8,800
$ 8,800
(b)
Year
Depreciation Computation
Expense
MACHINE 2
(1)
(2)
2013
2014
$180,000 X 25% X 8/12 = $30,000
$150,000 X 25% = $37,500
$30,000
$37,500
PROBLEM 9-3B
(a) (1) Purchase price ................................................................. $ 58,000
Sales tax ........................................................................... 2,750
Shipping costs ................................................................. 100
Equipment .......................................................... 61,000
(2) Recorded cost .................................................................. $ 61,000
Less: Salvage value ........................................................ 5,000
Depreciation Expense ........................................ 14,000
Accumulated Depreciation—
(b) (1) Recorded cost .................................................................. $120,000
Less: Salvage value ........................................................ 10,000
(2)
Year
Book Value at
Beginning of
Year
DDB Rate
Annual
Depreciation
Expense
Accumulated
Depreciation
2015
2016
2017
2018
$120,000
60,000
30,000
15,000
*50%*
*50%*
*50%*
*50%*
$60,000
30,000
15,000
5,000**
$60,000
90,000
105,000
110,000
PROBLEM 9-3B (Continued)
$4.40 per unit.
Annual Depreciation Expense
2015: $4.40 X 5,500 = $24,200
reports the highest.
These facts occur because the declining-balance method is an accelerated
depreciation method in which the largest amount of depreciation is
recognized in the early years of the asset’s life. If the straight-line method
The amount of depreciation expense recognized using the units-of-activity
