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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 – $85,000).
EXERCISE 10-14
*EXERCISE 10-15
(a) Equipment (new) ........................................................ 55,000
Accumulated Depreciation—Equipment (old) ......... 22,000
Loss on Disposal of Plant Assets ............................ 4,000
Equipment (old) .................................................. 64,000
Cash .................................................................... 17,000
(b) Equipment (new) ........................................................ 14,000
Accumulated Depreciation—Equipment (old) ......... 4,000
Gain on Disposal of Plant Assets ..................... 3,000
Equipment (old) .................................................. 12,000
Cash .................................................................... 3,000
*EXERCISE 10-16
(a) Equipment (new) ....................................................... 3,000
Loss on Disposal of Plant Assets ............................ 4,000
Accumulated Depreciation—Equipment (old) ........ 15,000
Equipment (old) ................................................. 22,000
(b) Equipment (new) ....................................................... 3,000
Accumulated Depreciation—Equipment (old) ........ 8,000
Equipment (old) ................................................. 10,000
Gain on Disposal of Plant Assets .................... 1,000
SOLUTIONS TO PROBLEMS
PROBLEM 10-1A
Item
Land
Buildings
Other Accounts
1
2
3
4
($ 4,000)
( 145,000)
$690,000
$ 5,000 Property Tax Expense
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
(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. 4,000,000
June 1 400,000
Buildings
Bal. 28,500,000
Bal. 28,500,000
Accumulated Depreciation—Buildings
Bal. 12,100,000
Equipment
Bal. 48,000,000
May 1 750,000
Accumulated Depreciation—Equipment
May 1 325,000
Dec. 31 500,000
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
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