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CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–4A
1.
Depreciation Book Value,
Year Expense End of Year
a. 1…………………………………………… $142,000 $658,000
*[($800,000 – $90,000) ÷ 5]
b. 1 [$800,000 × (1/5) × 2]……………
…
$320,000 $480,000
2. Cash
Accumulated Depreciation—Equipment
3. Cash
Accumulated Depreciation—Equipment
Depreciation,
End of Year
88,750
696,320
696,320
135,000
$320,000
$142,000
Accumulated
*
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–5A
2012
Jan. 4 Delivery Truck 28,000
Cash 28,000
2013
Jan. 6 Delivery Truck 48,000
Cash 48,000
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–5A (Concluded)
2014
July 1 Delivery Truck 54,000
Cash 54,000
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–6A
1. a. $1,600,000 ÷ 5,000,000 board feet = $0.32 per board foot;
2. a. Depletion Expense 352,000
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–1B
1. Land Other
Item Land Improvements Building Accounts
a. $ 3,600
b. 780,000
c. 23,400
3. Since land used as a plant site does not lose its ability to provide services, it is
4. Since Land Improvements are depreciated, depreciation expense of $4,320
($21,600 × 1/10 × 2) would be understated and net income would be overstated
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–2B
1.
a. Straight- b. Units-of- c. Double-
Line Output Declining-Balance
Year Method Method Method
2013 $ 71,250 $102,600 $160,000
3. Over the four-year life of the equipment, all three depreciation methods yield
Depreciation Expense
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–3B
a. Straight-line method:
2012: [($108,000 – $7,200) ÷ 3] × 3/12…………………………………………
…
$ 8,400
2013: [($108,000 – $7,200) ÷ 3]…………………………………………………
…
33,600
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–4B
1.
Depreciation Book Value,
Year Expense End of Year
a. 1……………………………………………
…
$25,625 $84,375
2. Cash
Accumulated Depreciation—Equipment
3. Cash
Accumulated Depreciation—Equipment
Depreciation,
End of Year
10,500
96,250
96,250
18,000
$ 25,625
Accumulated
*
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–5B
2012
Jan. 8 Delivery Truck 24,000
Cash 24,000
Mar. 7 Truck Repair Expense 900
Cash 900
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–5B (Concluded)
2014
Sept. 1 Delivery Truck 58,500
Cash 58,500
CHAPTER 9 Fixed Assets and Intangible Assets
Prob. 9–6B
1. a. Loss from impaired goodwill, $3,400,000
4,150,000 board feet × $0.238 per board foot = $987,700
2. a. Loss from Impaired Goodwill 3,400,000
Goodwill 3,400,000
Impaired goodwill.
CHAPTER 9 Fixed Assets and Intangible Assets
CP 9–1
It is considered unprofessional for employees to use company assets for personal
CP 9–2
You should explain to Nolan and Stacy that it is acceptable to maintain two sets
of records for tax and financial reporting purposes. This can happen when a
company uses one method for financial statement purposes, such as straight-line
depreciation, and another method for tax purposes, such as MACRS depreciation.
CASES & PROJECTS
CHAPTER 9 Fixed Assets and Intangible Assets
CP 9–3
1. a. Straight-line method:
2012: ($400,000 ÷ 5) × 1/2…………………………………………………
…
$40,000
2013: ($400,000 ÷ 5)………………………………………………………
…
80,000
CHAPTER 9 Fixed Assets and Intangible Assets
CP 9–3 (Continued)
2. a. Straight-line method:
2012 2013 2014 2015 2016 2017
Income before depreciation……………
…
$750,000 $750,000 $750,000 $750,000 $750,000 $750,000
Depreciation expense…………………… 40,000 80,000 80,000 80,000 80,000 40,000
Year
CHAPTER 9 Fixed Assets and Intangible Assets
CP 9–3 (Concluded)
3. For financial reporting purposes, Tim should select the method that provides
the net income figure that best represents the results of operations.
Note to Instructors: The concept of matching revenues and expenses is discussed
in Chapter 3. However, for income tax purposes, Tim should consider selecting
CP 9–4
Note to Instructors: The purpose of this activity is to familiarize students with the
procedures involved in acquiring a patent, a copyright, and a trademark. You may
wish to divide the class into three groups to report back on patents, copyrights,
and trademarks separately.
CHAPTER 9 Fixed Assets and Intangible Assets
CP 9–4 (Concluded)
The application also includes one or more claims, although it is not always a
requirement to submit these when first filing the application. The claims set out
what the applicant is seeking to protect in that they define what the patent owner
Copyright
While copyright in the United States automatically attaches upon the creation of an
original work of authorship, registration with the Copyright Office puts a copyright
holder in a better position if litigation arises over the copyright. A copyright holder
desiring to register his or her copyright should do the following:
CHAPTER 9 Fixed Assets and Intangible Assets
CP 9–5
b. The fixed asset turnover measures the amount of revenue earned per dollar
of fixed assets. Walmart earns $4.01 of revenue for every dollar of fixed assets,
while Occidental earns $0.56 and Comcast Corporation earns $1.60 in revenue
for every dollar of fixed assets. Occidental and Comcast require more fixed
assets to operate their businesses than does Walmart, for a given level of
revenue volume.
Does this mean that Walmart is a better company? Not necessarily. Revenue is
Revenue
Average Book Value of Fixed Assets
=Fixed Asset Turnover Ratioa.
