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Problem 10-7B (20 minutes)
a.
Analysis Component
Similarities—Amortization, depletion, and depreciation are similar in that
they are all methods of allocating costs of long-term assets to the periods
that benefit from their use.
Dec. 31
4,000
(c)
Dec. 31
Rent Expense ………………………………………………………
36,000
Prepaid Rent ………………………………………………….
Problem 10-8B (20 minutes)
1.
2017
(a)
Jan. 1
Leasehold ……………………………………………………….
40,000
Cash ………………………………………………………………
Jan. 1
36,000
Cash ………………………………………………………………
(c)
Jan. 3
Leasehold Improvements …………………………………….
20,000
Cash ………………………………………………………………
2.
2017
(a)
Dec. 31
Rent Expense ………………………………………………………
8,000
Accumulated Amortization—Leasehold …………..
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 10
Serial Problem — SP 10
Serial Problem — SP 10, Business Solutions (45 minutes)
1. For the three months ended March 31, 2018, depreciation expense was
$400 for office equipment and $1,250 for the computer equipment.
2.
December 31,
2017
December 31,
2018
Office Equipment ………………………………….
$ 8,000
$ 8,000
Office Equipment (book value) ……………..
$ 7,600
$ 6,000
$20,000
$20,000
$13,750
3.
Total asset turnover = Net sales / Average total assets
The 3-month total asset turnover at March 31, 2018:
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Reporting in Action — BTN 10-1
1. The percent of original cost remaining to be depreciated is computed
by taking the ratio of the book value of property and equipment to the
original cost ($ millions):
2. In Apple’s “Summary of Significant Accounting Policies” (Note 1:
Property, Plant and Equipment) it discloses estimated useful lives by
major asset category as follows:
Asset Life (in years)
3. The change in total property and equipment before accumulated
4. Total asset turnover for year ended ($ millions):
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Comparative Analysis — BTN 10-2
Note: Total asset turnover = Net sales / Average total assets
1. Total asset turnover for Apple ($ millions)
Total asset turnover for Google ($ millions)
2. Each dollar of Apple’s assets produces $0.89 and $0.83 in net sales for
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 10
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Ethics Challenge — BTN 10-3
1. When managers acquire new assets a number of decisions relative to
2. When assets are placed in use on a day other than the first day of the
month an assumption is often made that the assets are placed in use on
3. By always assuming the first day of the following month as the date of
purchase, less depreciation is (initially) accrued for the assets
Communicating in Practice — BTN 10-4
The solution to this activity will vary based on the industry and the
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 10
Taking It to the Net — BTN 10-5
1. Yahoo! reports Goodwill in the amount of ($ thousands) $808,114 at
December 31, 2015.
2.
Goodwill (in $ thousands)
Total
Amount
$ Change
from Prior
Year
%
Change
3. Yahoo!’s intangible assets are categorized into the three categories
December 31, 2015 (in thousands)
Developed technology and patents ……………………………………………
Total intangible assets, net ……………………………………………………….
4. Note 6 indicates that tradenames, trademarks, and domain names have
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Teamwork in Action — BTN 10-6
1. Annual depreciation for each year of the asset’s useful life:
Year
Straight-line
Double-Declining-Balance
Units-of-Production
2015
($44,000-$2,000)/4
= $10,500
(100%/4) x 2 = 50% is
declining-balance rate.
($44,000-$2,000)/60,000 miles
= $.70 per mile.
2. Depreciation is recorded in an adjusting entry at the end of each
period. The entry is:
3. Each expert’s presentation of the comparison of methods will be
slightly different. The experts should make the following points: The
$22,000 x 50%= $11,000
18,000 miles x $.70 = $12,600
$11,000 x 50% = $5,500
21,000 miles x $.70 = $14,700
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Teamwork in Action — BTN 10-6 – continued
Year
Straight–line
Double-Declining-
Balance
Units of Production
For reporting purposes, each expert will have different results. But
each should show:
Plant Assets:
= Cost – Accumulated depreciation
= $44,000 – (amount varies by method—see part 1 for annual amounts)
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Entrepreneurial Decision — BTN 10-7
Part 1
(a) Under current conditions, the total asset turnover is 3.2. This is
(b) Under this proposal, its asset turnover would increase to 4. This is
computed by taking its net sales of $12,000,000 ($8,000,000 +
Part 2
The proposal would yield an improved total asset turnover of 4 vis-à-vis the
current total asset turnover of 3.2. However, we need to recognize that this
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Hitting the Road — BTN 10-8
Global Decision — BTN 10-9
Note: Total asset turnover = Net sales / Average total assets
1. Total asset turnover for Samsung (KRW in millions):
2. In the current year, Samsung was more efficient than Google but less
efficient than Apple in using its assets to generate net sales.