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] |
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| 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] |
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| 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] |
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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] |
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| 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] |
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| 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] | ||
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| Balance sheet at December 31, 2012: | ||
| (under noncurrent assets) | ||
| Intangibles: | ||
| $ [removed] | ||
| [removed] | ||
| [removed] | ||
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| $ [removed] | ||
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eBook LinkView Hint #1references
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 $2,000. The machine has an estimated useful life in productive output of 200,000 units. Actual output was 20,000 in year 1 and 16,000 in year 2. |
| Required: | |
| 1. | For years 1 and 2 only, prepare separate depreciation schedules assuming: |
| a. | Straight-line method. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the “$” sign in your response.) |
| Year | Depreciation Expense |
Accumulated Depreciation |
Net Book Value |
| At acquisition | $ [removed] | ||
| 1 | $ [removed] | $ [removed] | [removed] |
| 2 | $ [removed] | [removed] | [removed] |
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| b. | Units-of-production method. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the “$” sign in your response.) |
| Year | Depreciation Expense |
Accumulated Depreciation |
Net Book Value |
| At acquisition | $ [removed] | ||
| 1 | $ [removed] | $ [removed] | [removed] |
| 2 | [removed] | [removed] | [removed] |
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| c. | Double-declining-balance method. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the “$” sign in your response.) |
| Year | Depreciation Expense |
Accumulated Depreciation |
Net Book Value |
| At acquisition | $ [removed] | ||
| 1 | $ [removed] | $ [removed] | [removed] |
| 2 | [removed] | [removed] | [removed] |
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| 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) |
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| 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) | |||
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| 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] | ||
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| Machine B |
| General Journal | Debit | Credit |
| [removed] | ||
| [removed] | ||
| [removed] | ||
| [removed] | ||
| [removed] | ||
| [removed] | ||
| [removed] | ||
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| Machine C |
| General Journal | Debit | Credit |
| [removed] | ||
| [removed] | ||
| [removed] | ||
| [removed] | ||
| [removed] | ||
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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. |
