Accounting Chapter 11 Homework Information is material if it can have an effect on a decision made by users

subject Type Homework Help
subject Pages 9
subject Words 2014
subject Authors David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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Problem 1113
Requirement 1
Hecala’s cost of the mineral mine is $13,721,871, determined as follows:
Mining site $10,000,000
Requirement 2
Depletion:
$13,721,871 800,000 tons = $17.1523 per ton
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1182 Intermediate Accounting, 8/e
Problem 1113 (continued)
Requirement 3
Requirement 4
Requirement 5
A change in the service life of plant and equipment and finite-life intangible
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Problem 1113 (concluded)
2017 Depreciation of equipment:
Original cost $140,000
Less: 2016 depreciation (19,500)
2017 Depreciation of structures:
Original cost $68,000
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1184 Intermediate Accounting, 8/e
Analysis Case 111
The terms depreciation, depletion, and amortization all refer to the same process
of allocating the cost of property and equipment and finite-life intangible assets to the
periods benefited by their use. However, each term is applied to a different type of
CASES
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Communication Case 112
Suggested Grading Concepts and Grading Scheme:
Content (70%)
_____ 50 Explains the concept of depreciation as a process of
cost allocation, not valuation.
____ Rational match versus market fluctuations.
____ Numerical example.
_____ 10 Purpose of the balance sheet is to provide information about
financial position, not to directly measure company value.
_____ 10 Purpose of the income statement is to provide cash flow
information, not to directly measure the change in company
value.
____
_____ 70 points
Writing (30%)
_____ 6 Terminology and tone appropriate to the audience of
a company president.
_____ 12 Organization permits ease of understanding.
____ Introduction that states purpose.
____ Paragraphs that separate main points.
_____ 12 English
____ Sentences grammatically clear and well organized,
concise.
____ Word selection.
____ Spelling.
____ Grammar and punctuation.
____
_____ 30 points
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1186 Intermediate Accounting, 8/e
Judgment Case 113
Requirement 1
Portland should have selected the straight-line depreciation method when
approximately the same amount of an asset’s service potential is used up each period.
Requirement 2
a. By associating depreciation with a group of machines instead of each
individual machine, Portland’s bookkeeping process is greatly simplified. Also, since
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Judgment Case 114
Requirement 1
a. The capitalized cost for the computer includes all costs reasonable and
Requirement 2
The rationale for using accelerated depreciation methods is based on the
assumption that an asset is more productive in the earlier years of its estimated useful
Judgment Case 115
There is no necessarily correct answer to the question. The support made for the
answer given is more important than the answer itself. Materiality is the critical
consideration.
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1188 Intermediate Accounting, 8/e
Communication Case 116
There is no right or wrong answer to this case. Both views, expense and
capitalize, can be defended once consideration is given to the materiality issue. The
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Integrating Case 117
Requirement 1
a. ($ in millions)
Inventory (understatement of 2017 beginning inventory) ........ 10
Retained earnings (understatement of 2016 income)......... 10
2017 adjusting entry:
c.
2017 adjusting entry:
($ in millions)
SYD
2015 depreciation $10 ($30 x 5/15)
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1190 Intermediate Accounting, 8/e
Case 117 (concluded)
Requirement 2
Shareholders’ Net
Assets Liabilities Equity Income Expenses
2015 $640 $330 $310 $210 $150
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Judgment Case 118
Requirement 1
A change from the sum-of-the-years’-digits method of depreciation to the
straight-line method for previously recorded assets is a change in accounting principle
Requirement 2
A change in the expected service life of an asset arising because of more
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1192 Intermediate Accounting, 8/e
Research Case 119
Requirement 1
Requirement 2
Requirement 3
Determining whether to record an impairment loss and actually recording the loss
Requirement 4
Property, plant, and equipment and finite-life intangible assets to be sold should
be classified as held-for-sale in the period in which all of the following criteria are
met:
Case 119 (concluded)
Requirement 5

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