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2015
E9A. Disposal of Plant Assets
Loss on Sale of Computer
525
E10A. Natural Resource Depletion and Depreciation of Related Plant Assets
Depletion charge per ton:
10-9
© 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.
Dividends
Net Cash Flows from
Operating Activities
–
Free
Cash Flow
E11A. Amortization of Copyrights and Trademarks
E14A. Free Cash Flow
=–
Since the trademark's life is indefinite, it should be carried at cost and evaluated
E12A. Accounting for a Patent
Note to Instructor: Solutions for Exercises: Set B are provided separately on the Instructor's
Purchases of
Plant Assets
Write-off of worthless patent
E13A. Management Issues
These results tell us that this company has a liquidity problem and needs to raise more
cash through financing activities to finance its purchases of plant assets.
$1,184,000=
+Sale of Plant
Assets
10-10
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2.
P1. Identification of Long-Term Assets Terminology
The items that would be seen on an income statement are (g) depreciation, (h) de-
pletion, (i) amortization, and (j) revenue expenditures. Of these, only revenue ex-
penditures would result in an outlay of cash. Items (a)–(f) are assets or affect asset
accounts.
Problems
10-11
© 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.
Land
Improvements Building Equipment
*
2.
of this is in the interest of achieving a proper application of accrual accounting.
Attorney's fee
P2. Determining Cost of Assets
Cergo Computers
Schedule of Proper Charges for Training Center
December 31, 2014
Land
Cost of land
The classification of the above items among several accounts will affect profitability
(2 months / 10 months) × $64,000 = $12,800;
(6 months / 10 months) × $64,000 = $38,400;
(1 month / 10 months) × $64,000 = $6,400;
$ 34,900
598,000
10-12
© 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.
Carrying
Value
3.
Depreciation
Depreciation
Year ComputationMethod
Straight-line results in equal amounts of annual depreciation over the five years. The
production method results in variable amounts of depreciation and is unpredictable
Depreciation Table
P3. Comparison of Depreciation Methods
*
10-13
© 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.
Carrying
Value
3.
P4. Comparison of Depreciation Methods
Depreciation Table
Straight-line results in equal amounts of annual depreciation over the six years. The
Depreciation
Method
Year Computation
Depreciation
10-14
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
b.
5.
If the company sold and mined 250,000 tons of ore instead of 450,000, the amount of
Depreciation, straight-line method
P5. Natural Resource Depletion and Depreciation of Related Plant Assets
10-15
© 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.
Land
Land Improvements Buildings Machinery Expense
2.
Alternate Problems
P6. Determining Cost of Assets
Krall Company
December 31, 2014
The classification of the above items among several accounts will affect profitability
Schedule of Proper Charges to Asset and Expense Accounts
10-16
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
