Exercise 7-22A, Obj. 1, 4
Student Name
Course Name
Student ID:
Date:
Machine No. Appraisal Value
1 $73,100
2 120,400
3 21,500
Exercise 7-22A
Instructions
Each machine’s cost?
Machine
Appraised
Value
Percentage of Total Market Value Total Cost
Cost of
Each
Machine
1 $73,100 Enter explanation $209,000
2 120,400 Enter explanation $209,000
3 21,500 $21,500/$215,000 10.00% $209,000
Totals 215,000$ FORMULA
Result of sale?
Sale price of machine no. 3 . . . . . . . . . . . .
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –
Gain on sale of machine . . . . . . . . . . . . . . . . .
Financial Accounting
Test Your Knowledge
Eastwood Manufacturing bought three used machines in a $209,000 lump-sum purchase.
An independent appraiser valued the machines as shown:
What is each machine’s individual cost? Immediately after making this purchase, Eastwood
sold machine 3 for its appraised value. What is the result of the sale? (Round decimals to
three places when calculating proportions, and use your computed percentages
throughout.)
Students: Please fill-in areas that
are shaded.
Allocate costs to assets acquired in a lump-sum purchase; dispose
of a plant asset
Exercise 7-22A, Obj. 1, 4
Student Name
Course Name
Student ID:
Date:
Machine No. Appraisal Value
1 $73,100
Exercise 7-22A
Instructions
Each machine’s cost?
Machine
Appraised
Value
Percentage of Total Market Value Total Cost
Cost of Each
Machine
1 $73,100 73,100/215,000 34.0% $209,000 71,060$
Financial Accounting
Test Your Knowledge
Eastwood Manufacturing bought three used machines in a $209,000 lump-sum purchase. An
independent appraiser valued the machines as shown:
What is each machine’s individual cost? Immediately after making this purchase, Eastwood
sold machine 3 for its appraised value. What is the result of the sale? (Round decimals to
three places when calculating proportions, and use your computed percentages throughout.)
Students: Please fill-in areas that are
shaded.
Allocate costs to assets acquired in a lump-sum purchase; dispose
of a plant asset
Exercise 7-25A, Obj. 2, 3
Student Name
Course Name
Student ID:
Date:
Which method best tracks the wear and tear on the van? Which method would Ralph’s prefer
to use for income tax purposes? Explain in detail why Ralph’s prefers this method.
Piccadilly Pizza bought a used Toyota delivery van on January 2, 2016, for $19,200. The van was expected to
remain in service for four years (71,200 miles). At the end of its useful life, Ralph’s officials estimated that the
van’s residual value would be $1,400. The van traveled 28,000 miles the first year, 20,500 miles the second
year, 18,500 miles the third year, and 4,200 miles in the fourth year. Prepare a schedule of depreciation
expense per year for the van under the three depreciation methods discussed in this chapter. (For units-of-
production and double-declining-balance, round to the nearest two decimals after each step of the
calculation.)
Financial Accounting
Students: Please fill-in areas that are
shaded.
Determining depreciation amounts by three methods
Exercise 7-25A
Instructions
Show answers below, but explain how you arrived at them in the space provided.
Year
Straight-
Line
Units-of-
Production
Double-
Declining
Balance
2012 FORMULA FORMULA FORMULA
2013 FORMULA FORMULA FORMULA
2014 FORMULA FORMULA FORMULA
2015 FORMULA FORMULA FORMULA
Straight Line Computations:
Units-of-productions Computations:
Double-declining-balance Computations:
Which method best tracks the wear and tear on the van?
Which method for income tax purposes?
Why?
Enter explanation here.
Test Your Knowledge
Show Computations
Select from list
Select from list
Exercise 7-25A, Obj. 2, 3
Student Name
Course Name
Student ID:
Date:
Which method best tracks the wear and tear on the van? Which method would Ralph’s prefer
to use for income tax purposes? Explain in detail why Ralph’s prefers this method.
Financial Accounting
Piccadilly Pizza bought a used Toyota delivery van on January 2, 2016, for $19,200. The van was expected to remain
in service for four years (71,200 miles). At the end of its useful life, Ralph’s officials estimated that the van’s residual
value would be $1,400. The van traveled 28,000 miles the first year, 20,500 miles the second year, 18,500 miles the
third year, and 4,200 miles in the fourth year. Prepare a schedule of depreciation expense per year for the van under
the three depreciation methods discussed in this chapter. (For units-of-production and double-declining-balance,
round to the nearest two decimals after each step of the calculation.)
Students: Please fill-in areas that are
shaded.
Determining depreciation amounts by three methods
Exercise 7-25A
Instructions
Show answers below, but explain how you arrived at them in the space provided.
Year
Straight-Line
Units-of-
Production
Double-
Declining
Balance
2012 4,450$ 7,000$ 9,600$
Straight Line Computations:
($19,200 – 1,400)/4 = $4,450 per year
Units-of-productions Computations:
(19,200 – 1,400) / 71,200 miles = $0.25/mile:
2016 28,000$ x 0.25 $7,000
Double-declining-balance Computations:
twice the straight line rate: 1/4 x 2 = 50%
2016 $19,200 x .50 = $9,600
Test Your Knowledge
Show Computations
2013 4,450 5,125$ 4,800$
2014 4,450 4,625$ 2,400$
2015 4,450 1,050$ 1,000$
Problem 7-66A, Obj. 1, 2, 3
Student Name
Course Name
Student ID:
Date:
a. Purchase price of land, including an old building that will be used
for a garage (land market value is $315,000; building market
value is $85,000).…..………..…..………..…..………..………..…..………..…..…. 360,000$
b. Landscaping (additional dirt and earth moving)…….…..………..…..………. 8,800
c. Fence around the land ……………..…..………..………..…..………..…..………... 31,100
d. Attorney fee for title search on the land …….…..…..………..………..…..…… 600
e. Delinquent real estate taxes on the land to be paid by Monroe Sales……. 5,500
f. Company signs at entrance to the property …..………..…..………..…..…….. 1,000
g. Building permit for the sales building ……..………..…..………..………..…..… 300
h. Architect fee for the design of the sales building………..…..………..……….. 45,220
i. Masonry, carpentry, and roofing of the sales building.………..…..………... 510,000
j. Renovation of the garage building.………..…..………..………..…..………..…. 32,900
k. Interest cost on construction loan for sales building …………..………..….... 9,200
l. Landscaping (trees and shrubs) …….………..………..…..………..…..……….... 6,700
m. Parking lot and concrete walks on the property ……..………..…..………..… 52,100
n. Lights for the parking lot and walkways ……..………..…..………..………..… 7,300
o. Salary of construction supervisor (84% to sales building; 10%
to land improvements; and 6% to garage building renovations)…..…..…. 42,000
p. Office furniture for the sales building………..…..………..………..…..……….. 79,600
q. Transportation and installation of furniture……………..…..………..…..…… 800
Assume Bowler Supply depreciates buildings over 30 years, land improvements over 15 years, and
furniture over 12 years, all on a straight-line basis with zero residual value.
Students: Please fill-in areas that
are appropriate – no shading in
requirement 1.
Assume Bowler Supply, Inc., opened an office in Dublin, Ohio. Bowler Supply incurred the following costs in
acquiring land, making land improvements, and constructing and furnishing the new sales building:
Financial Accounting
Measure and account for plant assets; distinguish a
capital expenditure from an expense; measure and record depreciation
Problem 7-66A
Requirements
1.
2.
3. How will what you learned in this problem help you manage a business?
Requirement 1
Enter in appropriate column – no shading provided in requirement 1.
ITEM LAND
LAND
IMPROVEMENTS
SALES
BUILDING
GARAGE
BUILDING
FURNITURE
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
Totals $ – $ – $ – $ – $ –
Computations:
Test Your Knowledge
Show how to account for each of Bowler Supply’s costs by listing the cost under the correct
account. Determine the total cost of each asset.
All construction was complete and the assets were placed in service on April 2. Record
depreciation for the year ended December 31. Round to the nearest dollar.
Problem 7-66A
Requirement 2
DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT
Dec. 31
Dec. 31
Dec. 31
Dec. 31
Requirement 3
Enter explanation here.
Journal
Problem 7-66A, Obj. 1, 2, 3
Student Name
Course Name
Student ID:
Date:
a. Purchase price of land, including an old building that will be used
for a garage (land market value is $315,000; building market
value is $85,000)…………………..……………………..……………………..………. 360,000$
b. Landscaping (additional dirt and earth moving)……………..…………..……. 8,800
c. Fence around the land ………..……………………..……………………..………….. 31,100
d. Attorney fee for title search on the land ………….……………………..……….. 600
e. Delinquent real estate taxes on the land to be paid by Monroe Sales……. 5,500
f. Company signs at entrance to the property …………………..…………………. 1,000
g. Building permit for the sales building …………………………………..…………. 300
h. Architect fee for the design of the sales building……….…………..………….. 45,220
i. Masonry, carpentry, and roofing of the sales building……….…………..….. 510,000
j. Renovation of the garage building……………………..……………………..……. 32,900
k. Interest cost on construction loan for sales building ………………………….. 9,200
l. Landscaping (trees and shrubs) ….…………..……………………..………………. 6,700
m. Parking lot and concrete walks on the property ……………..………………… 52,100
n. Lights for the parking lot and walkways ……………..……………………..…… 7,300
o. Salary of construction supervisor (84% to sales building; 10%
to land improvements; and 6% to garage building renovations)………….. 42,000
p. Office furniture for the sales building….…………..……………………..………. 79,600
q. Transportation and installation of furniture……….……………………..…….. 800
Assume Bowler Supply depreciates buildings over 30 years, land improvements over 15 years, and
furniture over 12 years, all on a straight-line basis with zero residual value.
Measure and account for plant assets; distinguish a
capital expenditure from an expense; measure and record depreciation
Assume Bowler Supply, Inc., opened an office in Dublin, Ohio. Bowler Supply incurred the following costs in
acquiring land, making land improvements, and constructing and furnishing the new sales building:
Students: Please fill-in areas that
are appropriate – no shading in
requirement 1.
Financial Accounting
Problem 7-66A
Requirements
1.
2.
3. How will what you learned in this problem help you manage a business?
Requirement 1
Enter in appropriate column – no shading provided in requirement 1.
ITEM LAND
LAND
IMPROVEMENTS
SALES
BUILDING
GARAGE
BUILDING
FURNITURE
a. 283,500$ 76,500$
b. 8,800
Show how to account for each of Bowler Supply’s costs by listing the cost under the correct
account. Determine the total cost of each asset.
All construction was complete and the assets were placed in service on April 2. Record
depreciation for the year ended December 31. Round to the nearest dollar.
Test Your Knowledge
d. 600
e. 5,500
g. 300$
h. 45,220
n. 7,300
o. 4,200 35,280 2,520
p. 79,600
q. 800
Problem 7-66A
Requirement 2
DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT
Dec. 31 5,120
Journal
Depreciation expense – Land Improvements
Dec. 31 15,000
Dec. 31 2,800
Dec. 31 5,025
Depreciation expense – Sales Building
Depreciation Expense – Garage
Accumulated Depreciation – Furniture
Depreciation Expense – Furniture
Accumulated Depreciation – Land Improvements
Accululated Depreciation – Sales Building
Accumulated Depreciation – Garage Building
Problem 7-68A, Obj. 1, 3, 4
Student Name
Course Name
Student ID:
Date:
Jan. 3 Traded in equipment with accumulated depreciation of $61,000 (cost of
$136,000) for similar new equipment with a cash cost of $183,000. Received
a trade-in allowance of $76,000 on the old equipment and paid $107,000
in cash.
June 30 Sold a building that had a cost of $655,000 and had accumulated depreciation
of $160,000 through December 31 of the preceding year. Depreciation
is computed on a straight-line basis. The building has a 40-year useful life
and a residual value of $275,000. Carr received $140,000 cash and a
$350,250 note receivable.
Oct. 31 Purchased land and a building for a single price of $310,000. An independent
appraisal valued the land at $50,250 and the building at $284,750.
Dec. 31 Recorded depreciation as follows:
Equipment has an expected useful life of five years and an estimated residual
value of 11% of cost. Depreciation is computed on the double-declining-balance
method.
Depreciation on buildings is computed by the straight-line method. The
new building carries a 40-year useful life and a residual value equal to 20%
of its cost.
Carr, Inc., has the following plant asset accounts: Land, Buildings, and Equipment, with a separate
accumulated depreciation account for each of these except Land. Carr completed the following
transactions:
Financial Accounting
Measure and account for the cost of plant assets and
depreciation; analyze and record a plant asset disposal
Students: Please fill-in areas that
shaded
Problem 7-68A
Instructions
Record the transactions in Carr, Inc.’s journal.
DATE DEBIT CREDIT
Jan. 3
June 30
30
Oct. 31
Dec. 31
31
Test Your Knowledge
Journal
ACCOUNT TITLES AND EXPLANATION
Problem 7-68A, Obj. 1, 3, 4
Student Name
Course Name
Student ID:
Date:
Jan. 3 Traded in equipment with accumulated depreciation of $61,000 (cost of
$136,000) for similar new equipment with a cash cost of $183,000. Received
a trade-in allowance of $76,000 on the old equipment and paid $107,000
in cash.
June 30 Sold a building that had a cost of $655,000 and had accumulated depreciation
of $160,000 through December 31 of the preceding year. Depreciation
is computed on a straight-line basis. The building has a 40-year useful life
and a residual value of $275,000. Carr received $140,000 cash and a
$350,250 note receivable.
Oct. 31 Purchased land and a building for a single price of $310,000. An independent
appraisal valued the land at $50,250 and the building at $284,750.
Dec. 31 Recorded depreciation as follows:
Equipment has an expected useful life of five years and an estimated residual
value of 11% of cost. Depreciation is computed on the double-declining-balance
method.
Depreciation on buildings is computed by the straight-line method. The
new building carries a 40-year useful life and a residual value equal to 20%
of its cost.
Financial Accounting
Students: Please fill-in areas that
shaded
Carr, Inc., has the following plant asset accounts: Land, Buildings, and Equipment, with a separate
accumulated depreciation account for each of these except Land. Carr completed the following
transactions:
Measure and account for the cost of plant assets and
depreciation; analyze and record a plant asset disposal
Problem 7-68A
Instructions
Record the transactions in Carr, Inc.’s journal.
DATE DEBIT CREDIT
Jan. 3 183,000
61,000
136,000
Test Your Knowledge
Journal
Equipment (new)
Equipment – old
ACCOUNT TITLES AND EXPLANATION
Accumulated Depreciation – Equipment
Depreciation expense – Building **
Accumulated Depreciation – Building
Depreciation expense – equipment ($183,000 x 2/5)
Accumulated Depreciation – Equipment
Accumulated Depreciation – Building