1.
Depreciation Book Value,
Year Expense End of Year
a. 1………………………………………………
…
$142,000 $658,000
…
…
…
…
b. 1 [$800,000 × (1/5) × 2]………………… $320,000 $480,000
*Book value should not be reduced below $90,000, the residual value.
2. Cash
Accumulated Depreciation—Equipment
3. Cash
Depreciation,
End of Year
88,750
696,320
135,000
$320,000
$142,000
Accumulated
*
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–5A
2012
Jan. 4 Delivery Truck 28,000
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–5A (Concluded)
2014
July 1 Delivery Truck 54,000
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–6A
1. a. $1,600,000 ÷ 5,000,000 board feet = $0.32 per board foot;
2. a. Depletion Expense 352,000
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–1B
1. Land Other
Item Land Improvements Building Accounts
a. $ 3,600
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
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–2B
1.
a. Straight- b. Units-of- c. Double-
Line Output Declining-Balance
Year Method Method Method
2013 $ 71,250 $102,600 $160,000
Calculations:
Straight-line method:
Units-of-output method:
Double-declining-balance method:
3. Over the four-year life of the equipment, all three depreciation methods yield
Depreciation Expense
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–3B
a. Straight-line method:
2012: [($108,000 – $7,200) ÷ 3] × 3/12…………………………………………
…
$ 8,400
b. Units-of-output method:
2012: 1,350 hours × $8.40*……………………………………………………… $11,340
…
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–4B
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 10 Fixed Assets and Intangible Assets
Prob. 10–5B
2012
Jan. 8 Delivery Truck 24,000
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–5B (Concluded)
2014
Sept. 1 Delivery Truck 58,500
Cash 58,500
CHAPTER 10 Fixed Assets and Intangible Assets
Prob. 10–6B
1. a. Loss from impaired goodwill, $3,400,000
b. $4,800,000 ÷ 8 years = $600,000;
2. a. Loss from Impaired Goodwill 3,400,000
CHAPTER 10 Fixed Assets and Intangible Assets
CP 10–1
It is considered unprofessional for employees to use company assets for personal
CP 10–2
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 10 Fixed Assets and Intangible Assets
CP 10–3
1. a. Straight-line method:
2012: ($400,000 ÷ 5) × 1/2…………………………………………………
…
$40,000
2013: ($400,000 ÷ 5)………………………………………………………
…
80,000
…
…
…
…
…
…
CHAPTER 10 Fixed Assets and Intangible Assets
CP 10–3 (Continued)
2. a. Straight-line method:
2012 2013 2014 2015 2016 2017
Year
CHAPTER 10 Fixed Assets and Intangible Assets
CP 10–3 (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 10–4
Note to Instructors: The purpose of this activity is to familiarize students with the
CHAPTER 10 Fixed Assets and Intangible Assets
CP 10–4 (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
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
CP 10–5
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.