EXERCISE 10-10 (Continued)
(c) Cash ………………………………………………………………… 11,000
Accumulated Depreciation—Equipment ……………… 36,000
Loss on Disposal of Plant Assets ………………………. 18,000
Equipment ………………………………………………….. 65,000
EXERCISE 10-11
(a) Dec. 31 Inventory …………………………..………………. 80,000
Accumulated Depletion
(100,000 X $.80) ……………………….. 80,000
Cost (a) $720,000
Units estimated (b) 900,000 tons
Depletion cost per unit [(a) ÷ (b)] $0.80
EXERCISE 10-12
Dec. 31 Amortization Expense ……………………………. 10,000
Patents ($75,000 ÷ 5 X 8/12) ……………… 10,000
EXERCISE 10-13
1/2/17 Patents …………………………………………………. 595,000
Cash ……………………………………………… 595,000
4/1/17 Goodwill …………………………..…………………… 360,000
Cash ……………………………………………… 360,000
Ending balances, 12/31/17:
Patents = $510,000 ($595,000 – $85,000).
EXERCISE 10-14
*EXERCISE 10-15
(a) Equipment (new) ……………………………………………….. 55,000
Accumulated Depreciation—Equipment (old) ……… 22,000
Loss on Disposal of Plant Assets ………………………. 4,000
Equipment (old) ………………………………………….. 64,000
Cash ………………………………………………………….. 17,000
(b) Equipment (new) ……………………………………………….. 14,000
Accumulated Depreciation—Equipment (old) ……… 4,000
Gain on Disposal of Plant Assets ………………… 3,000
Equipment (old) ………………………………………….. 12,000
Cash ………………………………………………………….. 3,000
*EXERCISE 10-16
(a) Equipment (new) ………………………………………………. 3,000
Loss on Disposal of Plant Assets ………………………. 4,000
Accumulated Depreciation—Equipment (old) …….. 15,000
Equipment (old) …………………………………………. 22,000
(b) Equipment (new) ………………………………………………. 3,000
Accumulated Depreciation—Equipment (old) …….. 8,000
Equipment (old) …………………………………………. 10,000
Gain on Disposal of Plant Assets ……………….. 1,000
SOLUTIONS TO PROBLEMS
PROBLEM 10-1A
Item
Land
Buildings
1
2
3
4
($ 4,000)
( 145,000)
$690,000
PROBLEM 10-2A
(a)
Year
Computation
Accumulated
Depreciation
12/31
BUS 1
2015
2016
2017
$ 90,000 X 20% = $18,000
$ 90,000 X 20% = $18,000
$ 90,000 X 20% = $18,000
$18,000
36,000
54,000
2015
$55,000
BUS 3
(b)
Year
Computation
Expense
BUS 2
(1)
2015
$110,000 X 50% X 9/12 = $41,250
$41,250
PROBLEM 10-3A
(a) (1) Purchase price ……………………………………………………….. $ 48,000
Sales tax ………………………………………………………………… 1,700
Shipping costs ……………………………………………………….. 150
Insurance during shipping ………………………………………. 80
(2) Recorded cost ………………………………………………………… $ 50,000
Less: Salvage value ……………………………………………….. 5,000
(b) (1) Recorded cost ………………………………………………………… 180,000
Less: Salvage value ……………………………………………….. 10,000
(2)
Book Value at
Beginning
of Year
DDB
Rate
Annual Depreciation
Expense
Accumulated
Depreciation
$180,000
90,000
*50%*
*50%*
$90,000
45,000
$ 90,000
135,000
PROBLEM 10-3A (Continued)
(3) Depreciation cost per unit = ($180,000 – $10,000)/125,000 units =
$1.36 per unit.
Annual Depreciation Expense
2017: $1.36 X 45,000 = $61,200
(c) The declining-balance method reports the highest amount of depreciation
expense the first year while the straight-line method reports the lowest.
In the fourth year, the straight-line method reports the highest amount of
depreciation expense while the declining-balance method reports the
lowest.
PROBLEM 10-4A
Year
Depreciation
Expense
Accumulated
Depreciation
2015
2016
(b)$18,000(a)
18,000
$18,000
36,000
(a)
$120,000 – $12,000
6 years
= $18,000
PROBLEM 10-5A
(a) Apr. 1 Land…………………………………………. 2,130,000
Cash ………………………………….. 2,130,000
Cost $750,000
Accum. depreciation—
equipment 325,000
[($750,000 X 1/10 X 4) +
$25,000]
Book value 425,000
Cash proceeds 450,000
Gain on disposal $ 25,000
PROBLEM 10-5A (Continued)
Cost $500,000
Accum. depreciation—
(b) Dec. 31 Depreciation Expense ………………… 570,000
Accumulated Depreciation—
Buildings ………………………… 570,000
($28,500,000 X 1/50)
(c) GRAND COMPANY
Partial Balance Sheet
December 31, 2018
Plant Assets*
Land …………………………………………….. $ 5,730,000
Buildings ………………………………………. $28,500,000
Less: Accumulated depreciation—
PROBLEM 10-5A (Continued)
Land
Bal. 5,730,000
Bal. 4,000,000
June 1 400,000
Buildings
Bal. 28,500,000
Bal. 28,500,000
Accumulated Depreciation—Buildings
Bal. 12,670,000
Bal. 12,100,000
Equipment
Bal. 49,250,000
Bal. 48,000,000
May 1 750,000
Accumulated Depreciation—Equipment
May 1 325,000
Dec. 31 500,000
Bal. 9,050,000
Bal. 5,000,000
May 1 25,000
PROBLEM 10-6A
(a) Accumulated Depreciation—Equipment ……………… 50,000
Loss on Disposal of Plant Assets ………………………. 30,000
Equipment …………………………………………………. 80,000
PROBLEM 10-7A
(a) Jan. 2 Patents …………………………..………………… 27,000
Cash ………………………………………….. 27,000
(b) Dec. 31 Amortization Expense ……………………….. 10,000
Patents ………………………………………. 10,000
[($70,000 X 1/10) + ($27,000 X 1/9)]
(c) Intangible Assets
Patents ($97,000 cost – $17,000 amortization) (1) …………… $ 80,000
PROBLEM 10-8A
1. Research and Development Expense ………………. 136,000
Patents …………………………..……………………….. 136,000
PROBLEM 10-9A
(a)
LaPorta
Lott
Asset turnover
$1,300,000
$1,180,000
CHAPTER 10 COMPREHENSIVE PROBLEM SOLUTION
(a) 1. Equipment …………………………………………………… 22,800
Cash ……………………………………………………….. 22,800
2. Depreciation Expense …………………………………… 450
Accumulated Depreciation—Equipment ……. 450
3. Accounts Receivable ……………………………………. 9,000
Sales Revenue …………………………………………. 9,000
Cost of Goods Sold …………………………..………….. 6,300
Inventory …………………………………………………. 6,300
6. Insurance Expense ($3,600 X 4/6) ………………….. 2,400
Prepaid Insurance ……………………………………. 2,400
7. Depreciation Expense …………………………………… 4,000
Accumulated Depreciation—Buildings ……… 4,000