ACCT 2402 Introduction To Mang..

1.

value:
1.00 points

 Purity Ice Cream Company bought a new ice cream maker at the beginning of the year at a cost of \$10,000. The estimated useful life was four years, and the residual value was \$1,000. Assume that the estimated productive life of the machine was 9,000 hours. Actual annual usage was 3,600 hours in year 1; 2,700 hours in year 2; 1,800 hours in year 3; and 900 hours in year 4.

 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. (Round your answers to the nearest dollar amount. Omit the “\$” sign in your response.)

 a. Straight-line.

 Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition \$ [removed] 1 \$ [removed] \$ [removed] [removed] 2 [removed] [removed] [removed] 3 [removed] [removed] [removed] 4 [removed] [removed] [removed]

 b. Units-of-production (use four decimal places for the per unit output factor).

 Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition \$ [removed] 1 \$ [removed] \$ [removed] [removed] 2 [removed] [removed] [removed] 3 [removed] [removed] [removed] 4 [removed] [removed] [removed]

 c. Double-declining-balance.

 Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition \$ [removed] 1 \$ [removed] \$ [removed] [removed] 2 [removed] [removed] [removed] 3 [removed] [removed] [removed] 4 [removed] [removed] [removed]

2.

value:
1.00 points

 Trotman Company had three intangible assets at the end of 2012 (end of the accounting year):

 a. Computer software and Web development technology purchased on January 1, 2011, for \$70,000. The technology is expected to have a four-year useful life to the company. b. A patent purchased from Ian Zimmer on January 1, 2011, for a cash cost of \$6,000. Zimmer had registered the patent with the U.S. Patent Office five years ago. c. An internally developed trademark registered with the federal government for \$13,000 on November 1, 2012. Management decided the trademark has an indefinite life.

 Required: 1. Compute the acquisition cost of each intangible asset. (Omit the “\$” sign in your response.)

 Acquisition cost Technology \$ [removed] Patent [removed] Trademark [removed]

 2 Compute the amortization of each intangible at December 31, 2012. The company does not use contra-accounts. (Assume the company uses straight-line method.) (Leave no cells blank – be certain to enter “0” wherever required. Omit the “\$” sign in your response.)

 Amortization Technology \$ [removed] Patent [removed] Trademark [removed]

 3 Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2012. (Omit the “\$” sign in your response.)

 Income statement for 2012: Operating expenses: \$ [removed]

 Balance sheet at December 31, 2012: (under noncurrent assets) Intangibles: \$ [removed] [removed] [removed] \$ [removed]

3.

value:
1.00 points

 You are a financial analyst for Ford Motor Company and have been asked to determine the impact of alternative depreciation methods. For your analysis, you have been asked to compare methods based on a machine that cost \$106,000. The estimated useful life is 13 years, and the estimated residual value is \$2,000. The machine has an estimated useful life in productive output of 200,000 units. Actual output was 20,000 in year 1 and 16,000 in year 2.

 Required: 1. For years 1 and 2 only, prepare separate depreciation schedules assuming:

 Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition \$ [removed] 1 \$ [removed] \$ [removed] [removed] 2 \$ [removed] [removed] [removed]

 Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition \$ [removed] 1 \$ [removed] \$ [removed] [removed] 2 [removed] [removed] [removed]

 Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition \$ [removed] 1 \$ [removed] \$ [removed] [removed] 2 [removed] [removed] [removed]

 During 2012, Jensen Company disposed of three different assets. On January 1, 2012, prior to their disposal, the accounts reflected the following:

 Asset Original Cost Residual Value Estimated Life Accumulated Depreciation (straight line) Machine A \$ 21,000 \$ 3,000 8 years \$ 13,500 (6 years) Machine B 41,000 4,000 10 years 29,600 (8 years) Machine C 75,000 5,000 15 years 56,000 (12 years)

 The machines were disposed of in the following ways:

 a. Machine A: Sold on January 1, 2012, for \$7,200 cash. b. Machine B: Sold on December 31, 2012, for \$8,500; received cash, \$2,500, and a \$6,000 interest bearing (12 percent) note receivable due at the end of 12 months. c. Machine C: On January 1, 2012, this machine suffered irreparable damage from an accident. On January 10, 2012, a salvage company removed the machine at no cost.

4.

value:
1.00 points

 Required: 1. Give all journal entries related to the disposal of each machine in 2012. (Leave no cells blank – be certain to enter “0” wherever required. In cases where no entry is required, please select the option “No journal entry required” for your answer to grade correctly. Omit the “\$” sign in your response.)

 Machine A

 General Journal Debit Credit [removed] [removed] [removed] [removed] [removed] [removed]

 Machine B

 General Journal Debit Credit [removed] [removed] [removed] [removed] [removed] [removed] [removed]

 Machine C

 General Journal Debit Credit [removed] [removed] [removed] [removed] [removed]

5.

value:
1.00 points

 2 Explain the accounting rationale for the way that you recorded each disposal.

 Machine A:  Disposal of a long-lived asset with the price below net book value results in a Machine B:  Disposal of a long-lived asset with the price above net book value results in a Machine C:  Disposal of a long-lived asset due to damage results in a remaining book value.