Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1.
7.
A company would spend millions of dollars on goodwill because the company anti-
CHAPTER 10—Solutions
LONG-TERM ASSETS
Discussion Questions
On the date of acquisition, the carrying value equals the current market value. After
10-1
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Apportionment*
*Rounded
Short Exercises
SE1. Classifying Cost of Long-Term Assets
SE2. Group Purchase
Percentage
Asset
Appraisal
$1,875
8,000 $2,250
– $750 2,200
) ×
– $750 2,000
=
$1,313( $8,250 – $750 1,400 =Year 4:
) ×
8,000
) ×
8,000
8,000
$2,063$8,250(
Year 2: $8,250(
Year 3: =
*
*
10-2
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1. =
=–
=
2. a.
=
=
b.
=
=
c.
=
=
$1,600
Gain (Loss) on Sale of Equipment
Cash Received – Carrying ValueGain (Loss) on Sale of Equipment
$14,400
$32,400 $18,000
SE5. Double-Declining-Balance Method
Depreciation for
SE6. Disposal of Plant Assets: No Trade-In
Asset sold for $6,000 cash
Asset sold for $16,000 cash
Cash Received – Carrying Value
Cash Received – Carrying ValueGain (Loss) on Disposal of Equipment
Asset discarded as having no value
$(14,400)
$(8,400)
Carrying Value Equipment – Accumulated Depreciation—Equipment
10-3
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2. 5.
3. 6.
SE7. Natural Resources
SE8. Intangible Assets: Computer Software
c
c
b
a
The research and development costs are expensed as incurred. The costs after the work-
–
Free
Cash Flow =Net Cash Flows from
Operating Activities
SE10. Free Cash Flow
This amount of free cash is the amount of cash that Maki Corporation has available for
–
Purchases of
Plant Assets +
Dividends
other purposes, such as expansion or investment, after it deducts the funds it has com-
mitted to continue operations at the planned level.
Sales of
Plant Assets
Depletion charge per ton:
10-4
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
3.
4.
5.
6.
Apportionment*
Cost of land:
A total of $338,400 should be debited to the Land account, and $78,400 should be debited
CE, N
CE, ER
RE, N
CE, A
E2A. Recognizing and Classifying the Cost of Long-Term Assets
Exercises: Set A
E1A. Recognition and Classification of Capital Expenditures
PercentageAppraisal
$240,000
Asset
E3A. Group Purchase
10-5
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
2.
21,600
21,600
$90,000
57,600
$32,400
$36,000 + $21,600 = $57,600
First year's depreciation:
100% / 5 = 20%; 20% × 2 = 40%
*
E4A. Cost of Long-Term Asset and Depreciation
Cost and depreciable cost of tractor:
Adjusting entry:
Drilling truck
double-declining-balance method
*
Balance sheet presentation:
Depreciation computed by straight-line method:
To record depreciation for 2014 using the
E5A. Depreciation Methods
Depreciation computed by production method:
Less accumulated depreciation
Property, plant, and equipment
Depreciation Expense—Drilling Truck
Accumulated Depreciation—Drilling Truck
*
10-6
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Year 1 × =
Year 2 × ( – ) = ×
/10=
/10=
–2 =5
First-year depreciation:
$560,000 $ 56,000
Depreciation to date:
Second-year depreciation:
E7A. Revision of Depreciation Rates
years years years
56,000
$112,000
100% / 4 = 25%; 25% × 2 = 50%
50%
Remaining depreciable cost:
$560,000
$1,120
$1,120 $560
$560 50% = $280
E6A. Double-Declining-Balance Method
50%
$560
Remaining useful life:
7
Third-year depreciation:
*
*
*
10-7
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
=
1.
=
2.
=
Cash Received – Carrying ValueGain (Loss) on Sale of Equipment
Asset sold for $12,000 cash
Cash Received – Carrying Value
E8A. Disposal of Plant Assets
Carrying Value
Gain (Loss) on Disposal of Equipment
Asset discarded as having no value
Equipment – Accumulated Depreciation—Equipment
10-8
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
