Accounting Chapter 11 Homework If a revaluation surplus account relating to the same asset had existed

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subject Words 1772
subject Authors David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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Exercise 113 (concluded)
5. Units-of-production:
$115,000 5,000
= $.50 per unit depreciation rate
220,000 units
Exercise 114
Building depreciation:
$5,000,000 200,000
Building addition depreciation:
Remaining useful life from June 30, 2016, is 27.5 years.
$1,650,000
= $60,000 per year
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Exercise 115
Asset A:
Straight-line rate is 20% (1 ÷ 5 years) x 2 = 40% DDB rate
Asset B:
Sum-of-the-years’ digits is 36 {[8 (8 + 1)]÷2}
Asset C:
$65,000 5,000
= $6,000
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Exercise 116
Requirement 1
1. Straight-line:
2. Sum-of-the-years’ digits:
Sum-of-the-years’ digits is ([6 (6 + 1)] ÷ 2) = 21
3. Double-declining balance:
1/6 (the straight-line rate) x 2 = 1/3 DDB rate
Exercise 117
Building depreciation:
$8,000,000* 800,000**
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1124 Intermediate Accounting, 8/e
Furniture and fixtures depreciation:
1/10 or 10% (the straight-line rate) x 2 = 20% DDB rate
Office equipment depreciation:
1/5 or 20% (the straight-line rate) x 2 = 40% DDB rate
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Exercise 118
Requirement 1
U.S. GAAP:
Requirement 2
IFRS:
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1126 Intermediate Accounting, 8/e
Exercise 119
Requirement 1
Requirement 2
($ in thousands) Before After
Revaluation Revaluation
Equipment $240 x 220/210 = $251
Requirement 3
Requirement 4
($ in thousands) Before After
Revaluation Revaluation
Equipment $240 x 195/210 = $223
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Exercise 1110
Requirement 1
Asset
Cost
Residual
Value
Depreciable
Base
Estimated
Life(yrs.)
Depreciation
per Year
(straight line)
Stoves
$15,000
$3,000
$12,000
6
$2,000
Requirement 2
To record the purchase of new refrigerators.
Refrigerators ................................................................... 2,700
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1128 Intermediate Accounting, 8/e
Exercise 1111
Requirement 1
Cost of the equipment:
Purchase price $154,000
Year
Book Value
Beginning
of Year
Depreciation
Rate per Year
=
Depreciation
Book Value
End of Year
2016
$160,000
25%
$ 40,000
$120,000
Straight-line depreciation:
Requirement 2
For plant and equipment used in the manufacture of a product, depreciation is a
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Exercise 1112
Requirement 1
$4,500,000
Depletion per ton = = $5.00 per ton
Requirement 2
Exercise 1113
Timber tract:
$3,200,000 600,000 = $.52 per board foot
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1130 Intermediate Accounting, 8/e
Exercise 1114
Requirement 1
Cost of copper mine:
Mining site $1,000,000
*Present value of $1, n = 4, i = 10% (Table 2)
Depletion:
$1,903,939
Depreciation:
$120,000 20,000
Depreciation per pound = = $.01 per pound
Requirement 2
Depletion of natural resources and depreciation of assets used in the extraction of
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Exercise 1115
Requirement 1
a. To record the purchase of a patent.
January 1, 2014
b. To record the purchase of a franchise.
2016
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Exercise 1115 (concluded)
2016 Year-end adjusting entries
Patent: To record amortization on the patent after change in useful life.
December 31, 2016
Calculation of annual amortization after the estimate change:
($ in thousands)
$700 Cost
$70 Previous annual amortization ($700 ÷ 10 years)
December 31, 2016
Requirement 2
Intangible assets:
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Exercise 1116
To record the purchase of the patent.
January 2, 2016
Patent .............................................................................. 500,000
Cash ............................................................................ 500,000
January, 2018
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Exercise 1116 (concluded)
To record amortization of the patent for the year 2018.
Calculation of revised annual amortization:
($ in thousands)
$500 Cost
$62.5 Previous annual amortization ($500 ÷ 8 years)
Exercise 1117
($ in millions)
Calculation of annual amortization after the estimate change:
$ in millions)
$9 Cost
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Exercise 1118
Requirement 1
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1136 Intermediate Accounting, 8/e
Exercise 1119
Requirement 1
Depreciation expense (determined below) .......................... 3,088
Calculation of annual depreciation after the estimate change:
$40,000 Cost
$7,200 Previous annual depreciation ($36,000 ÷ 5 years)
Requirement 2
Calculation of annual depreciation after the estimate change:
$40,000 Cost
Previous depreciation:
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Exercise 1120
SYD depreciation
[10 + 9 + 8 x ($1.5 .3) million] = $589,091
55
$1,500,000 Cost
Adjusting entry (2016 depreciation):
Depreciation expense (calculated above) ........................... 87,273
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Exercise 1121
Requirement 1
In general, we report voluntary changes in accounting principles retrospectively.
However, a change in depreciation method is considered a change in accounting
Requirement 2
Asset’s cost $2,560,000
Adjusting entry:
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Exercise 1122
Requirement 1
Analysis:
Correct Incorrect
(Should Have Been Recorded) (As Recorded)
2013 Equipment 350,000 Expense 350,000
Cash 350,000 Cash 350,000
To correct incorrect accounts
Requirement 2
Correcting entry:
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1140 Intermediate Accounting, 8/e
Exercise 1123
Requirement 1

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