Chapter 4 EOC assignment

44K6.1 Financial Accounting – ACC2001 CHAPTER ASSIGNMENT (Chapter 4) Questions Complex  Moderate  How many questions that you did answer? List the question that you are not able to answer Simple  _11 /11 Brief Exercises Complex  Moderate  How many brief exercises that you did answer? List the brief exercises that you are not able to answer Simple  _15 /15 Exercises Complex  Moderate  How many exercises that you did answer? List the exercises that you are not able to answer Simple  _9 /10 E 9-8 Problems & Critical Thinking Complex  Moderate  How many 6_/6 © 2020 by Dr Nguyen Huu Cuong Simple  “Liberal Arts - Self-initiative - Pragmatism” problems that you did answer? List the problems that you are not able to answer Student Information Full Name Ngô Thị Lan Dung Class 44k06.1 Phone 0372532471 Email Landungngo.2000@gmail.com Self-evaluation (Out of ten) © 2020 by Dr Nguyen Huu Cuong 9,5 /10 “Khai phóng - Tự thân - Hữu ích” 44K6.1 Financial Accounting – ACC2001 CHAPTER ASSIGNMENT (Chapter 4) FINANCIAL ACCOUNTING: TOOLS FOR DECISION-MAKING, 7th Canadian Edition (Kimmel P.D et al., 2017) QUESTION Q1: Capital expenditures comprise major purchases that will be used in the future Operating expenditures (expenses) represent day-to-day costs that are necessary to keep a business running Asset retirement cost is the offsetting asset that is created when an asset retirement obligation (ARO) is recognized The asset retirement cost increases the carrying amount of the fixed asset for which the ARO was created Q3: Title: In a finance lease agreement, ownership of the property is transferred to the lessee at the end of the lease term But, in operating lease agreement, the ownership of the property is retained during and after the lease term by the lessor Balloon/residual amount: In finance lease agreement, there is a balloon/residual option for the lessee to purchase the property or equipment at a specific price But, under an operating lease, the lessee does not have this option The balloon/residual on a finance lease is set using ATO asset guidelines Running costs & administration: Under an operating lease all running costs (servicing, registration, tyres, insurance etc) are included in the lease within the designated term and usage km with one set monthly repayment amount Under a finance lease these are generally not included meaning there can be greater administration and price fluctuation for the lessee Account treatment: Operating lease are treated as expenses (ie off balance sheet items) where as a finance lease is included as an asset for the lessee Edit: the tax treatment for leases will change in 2019, with operating leases appearing on the balance sheets as liabilities Accounting for an operating lease is relatively straightforward Lease payments are considered operating expenses and are expensed on the income statement The firm does not own the asset and, therefore, it does not show up on the balance sheet and the firm does not assess any depreciation for the asset In contrast, a capital lease involves the transfer of ownership rights of the asset to the lessee The lease is considered a loan (debt financing), and interest payments are expensed on the income statement The present market value of the asset is included in the balance sheet under the assets side and depreciation is charged on the income statement On the other side, the loan amount, which is the net present value of all future payments, is included under liabilities Q4: © 2020 by Dr Nguyen Huu Cuong “Liberal Arts - Self-initiative - Pragmatism” Straight – line method: straight-line depreciation results in the same amount of expense each year on the income statement Diminishing-balance results in higher expenses, and therefore lower net income, in the early years of the asset’s useful life It also results in lower expenses and higher net income in later years The units-of-production method vary each year depending on the actual usage of the asset Over the entire useful life, total depreciation is the same regardless of the method of depreciation While each depreciation method may allocate the cost of the asset differently each year, over the life of the asset, all methods allocate the same total amount of asset cost (the depreciable amount) to depreciation expense Just as depreciation expense has an inverse relationship with net income, it also has an inverse relationship with the change in the carrying amount Q5: Because To use Diminishing-Balance Method, we the following: Determine the straight-line depreciation rate by taking 100% and dividing it by the useful life in years But depreciable amount (the asset’s cost less residual )value  Determine the straight-line depreciation can’t rate by taking 100% Q6: Beacause The units-of-production method involves calculations that are quite similar to the straight-line method, but it allocates the depreciable base over the units of output rather than years of use It is logical to use this approach in those situations where the life is best measured by identifiable units of machine “consumption.” Q10: Accounting for the disposal of property and equipment is relatively straightforward First, to establish account balances that are appropriate at the date of sale, depreciation is recorded for the period of use during the current year In this way, the expense is matched with any revenues earned in the current period Second, the amount received from the sale is recorded while the book value of the asset (both its cost and accumulated depreciation) is removed If the owner receives less for the asset than this book value, a loss is recognized for the difference, which decreases reported net income If more is received than book value, the excess is recorded as a gain so that net income increases Q11: The gain or loss on the sale of an asset used in a business is the difference between the amount of cash that a company receives, and the asset's book value (carrying value) at the time of the sale In order to know the asset's book value at the time of the sale, the depreciation expense for the asset must be recorded right up to the date that the asset is sold If the cash received is greater than the asset's book value, the difference is recorded as a gain If the cash received is less than the asset's book value, the difference is recorded as a loss Q12: The plant asset and related accumulated depreciation should continue to be reported on the balance sheet without further depreciation or adjustment until the asset is retired Q13: Tangible and intangible assets have similar characteristics, in that they arepurchased for use in the operations and not for resale, have usefulnessbeyond one fiscal year and are © 2020 by Dr Nguyen Huu Cuong “Khai phóng - Tự thân - Hữu ích” 44K6.1 Financial Accounting – ACC2001 CHAPTER ASSIGNMENT (Chapter 4) depreciated or amortized, with theexception of land and indefinite life intangible assets Tangible andintangible assets are also similar in that their cost includes all of thenecessary outlays that are made to get the asset ready for its intendeduse They differ in their physical substance in that intangible assets haveno physical substance Q14: If an intangible asset has a finite useful life, then amortize it over that useful life The amount to be amortized is its recorded cost, less any residual value However, intangible assets are usually not considered to have any residual value, so the full amount of the asset is typically amortized If there is any pattern of economic benefits to be gained from the intangible asset, then adopt an amortization method that approximates that pattern If not, the customary approach is to amortize it using the straight-line method Q17: Pesowski use Intangible Assets with Finite Lives inclue copyright A copyright is granted by the Canadian Intellectual Property Offi ce, giving the owner the exclusive right to reproduce and sell an artistic or published work Generally, a copyright’s useful life is signifi cantly shorter than its legal life, and the copyright is therefore amortized over its useful life The cost of the copyright consists of the cost of acquiring and defending it The cost may be quite low and be composed of only the cost to acquire and register the copyright, or it may amount to a great deal more if a copyright infringement suit is involved © 2020 by Dr Nguyen Huu Cuong “Liberal Arts - Self-initiative - Pragmatism” BRIEF EXERCISES BE9-1: the cost of the land = $450,000 + $8,500 + $25,000+ $6,500 = $490,000 BE9-2: The cost of the truck = $42,000 + $1,000 + $750 = $43,750 BE9-3: (a) O (b) C (c) C (d) O (e) C (f) O (g) O (h) C (i) C (j) O BE9-4: The depreciable amount = $80,000 – $8,000 = $72,000 Annual depreciation = $72,000 ÷ = $18,000 Total depreciation over the truck’s life = $18,000 × = $72,000 BE9-5: Depreciation for 2018 $18,000 x 8/12 = $12,000 Depreciation for 2019 $18,000 BE9-6: Useful life = years  Straight line depreciation rate = 1/4 = 25% per year Depreciation rate for double declining balance method : 25% x 2= 50% per year Year 2018 2019 Carrying value $80,000 $40,000 © 2020 by Dr Nguyen Huu Cuong Rate 50% 50% Depreciation Accum Expense Depreciation $40,000 $40,000 $20,000 $60,000 Carrying value (Dec 31) $40,000 $30,000 “Khai phóng - Tự thân - Hữu ích” 44K6.1 2020 2021 Total Financial Accounting – ACC2001 CHAPTER ASSIGNMENT (Chapter 4) $30,000 $15,000 50% Carrying value $80,000 $66,667 $50,000 $37,500 $28,125 Rate (1 / 4) 25% 25% 25% 25% 25% $15,000 $7,000 $82,000 $75,000 $82,000 $15,000 $8,000 BE9-7: Year 2018 2019 2020 2021 2022 Total Depreciation Accum Expense Depreciation $13,333 $13,333 $16,667 $30,000 $12,500 $42,500 $9,375 $51,875 $1,758 $53,633 $53,633 Carrying value (Dec 31) $66,667 $50,000 $37,500 $28,125 $26,367 BE9-8: The depreciable amount per unit = (cost – residual value) : total km = ($33,000 - $500) : 325,000 = $0.1 Depreciation expense : 2018: 125,000 x $0.1 = $12,500 2019: 105,000 x $0.1 = $10,500 BE9-9: (a) The depreciable amount = $200,000 – $20,000= $180,000 Annual depreciation = $180,000 ÷ = $36,000 Equipment’s carrying amount at December 31, 2018 = $200,000 – x $36,000 = $128,000 (b) Recoverable amount = $100,000 Impairment loss amount = $128,000 - $100,000 = $28,000 BE9-10: (a) © 2020 by Dr Nguyen Huu Cuong “Liberal Arts - Self-initiative - Pragmatism” The depreciable amount = ($144,000 - $4,000) : = $28,000 Depreciation expense = $28,000 x /12 = $21,000 Debit depreciation expense 21,000 Credit accumulated depreciation 21,000 (b) Depreciation : January 1, 2016 - December 31, 2017 : $28,000 x = $56,000 January 1, 2018 - September 30, 2018 : $21,000  accumulated depreciation = $77,000 Carrying value = $144,000 - $77,000 = $67,000 Loss on disposal = $67,000 - $42,000 = $25,000 Debit cash 42,000 Debit accumulated depreciation 77,000 Debit loss on disposal 25,000 Credit equipment 144,000 BE9-11: (a) Debit accumulated depreciation 42,000 Credit equipment 42,000 (b) Debit accumulated Depreciation 40,000 Debit loss on Disposal of Plant Assets 2,000 Credit equipment 42,000 BE9-12: (a) (1) Debit patent 180,000 Credit cash 180,000 (2) Debit Amortization Expense 180,000 : x (9/12) = 27,000 Credit Accumulated Amortization 27,000 (b) Assets Intangible assets Patents 180,000 Less Accumulated amortization 27,000 © 2020 by Dr Nguyen Huu Cuong “Khai phóng - Tự thân - Hữu ích” 44K6.1 Financial Accounting – ACC2001 CHAPTER ASSIGNMENT (Chapter 4) Carrying amount 152,000 BE9-13: (a) Debit trademark 1,000 Credit cash 1,000 Debit patent 10,000 Credit cash 10,000 (b) Trademarks are amortized into an expense account To amortize the trademark, debit the amortization expense account and credit the trademark BE9-14: (a) I (j) PP&E (b) PP&E (k) PP&E (c) N (l) I (d) PP&E (m) N (e) N (n) I (f) PP&E (o) N (g) N (p) PP&E (h) PP&E (q) I (i) PP&E © 2020 by Dr Nguyen Huu Cuong “Liberal Arts - Self-initiative - Pragmatism” BE9-15: Property, plant, and equipment Land Buildings Less: Accumulated depreciation Furniture, machinery, and equipment Less: Accumulated depreciation Total property, plant, and equipment Intangible assets Finite-life intangible assets Less: Accumulated amortization Indefinite-life intangible assets Total intangible assets Goodwill Total long-lived assets 66 759 218 2,339 887 541 1,452 2,059 246 57 189 318 507 2,125 4,691 EXERCISES E9-1: a) Under the cost principke, the acquisition cost for property, plant, equipment includes all expenditures necessary to acquire the asset make it ready for its intended use b) Land Land Land Land Improvements Buildings Buildings Vehicles Vehicles Vehicles Expense 10 Prepaid Insurance E9-2: a) b) c) d) Cost of equipment = $75,000 + $500 + $200 + $1,800 + $2,800 = $78,500 April Straight line method Depreciation 2012 = $7371 E9-3: a) (1) Straight- line method PROBLEMS P9-3A: (a) cost of the machine = $360,000 + $2,000 + $8,000 = $370,000 (b) (1) the straight-line method The depreciable amount = $370,000 – $80,000 = $290,000 Annual depreciation = $290,000 ÷ = $58,000 Total depreciation = $290,000 (2) the double-diminishing-balance method Useful life = years  Straight line depreciation rate = 1/5= 20% per year Depreciation rate for double declining balance method : 20% x 2= 40% per year Year 2018 2019 2020 2021 2022 Total Carrying value $370,000 $271,333 $162,800 $97,680 Rate 40% x 8/12 40% 40% Depreciation Expense $98,667 $108,533 $65,120 $17,680 $290,000 Accum Depreciation $98,667 $207,200 $272,320 $290,000 $290,000 Carrying value (Dec 31) $271,333 $162,800 $97,680 $80,000 $80,000 (3) the units-of-production method The depreciable amount = $290,000 The depreciation = $290,000/ 6,200 = $46.77 per unit in 2018: $46.77 x 940 = $43,964 in 2019: $46.77 x 1,460 = $68,284 in 2020: $46.77 x 1,400 = $65,478 in 2021: $46.77 x 1,300 = $60,801 in 2022: $46.77 x 1,100 = $51,447 Double-declining balance method of depreciation causes net income to be lower in the early years of the asset’s life P9-4A: (1) the straight-line method The depreciable amount = $244,000 – $4,000= $240,000 Annual depreciation = $240,000 ÷ = $60,000 Total depreciation = $240,000 (2) the double-diminishing-balance method Useful life = years  Straight line depreciation rate = 1/4= 25% per year Depreciation rate for double declining balance method : 25% x 2= 50% per year Year 2018 2019 2020 2021 Total Carrying value $244,000 $152,500 $76,250 $38,125 Rate 50% x 9/12 50% 50% Depreciation Expense $91,500 $76,250 $38,125 $34,125 $240,000 Accum Carrying value (Dec 31) Depreciation $91,500 $152,500 $167,750 $76,250 $205,875 $38,125 $240,000 $4,000 (3) the units-of-production method The depreciable amount = $240,000 The depreciation = $240,000 / 80,000= $3 per unit in 2018: $3 x 14,800 = $53,400 in 2019: $3 x 20,400= $61,200 in 2020: $3 x 19,800= $59,400 in 2021: $3 x 20,000= $60,000 in 2022: $3 x 5,000= $15,000 (b) 1.the straight-line method: total depreciation expense = accumulated depreciation 2.the double-diminishing-balance method: total depreciation expense < accumulated depreciation 3.the units-of-production method: total depreciation expense < accumulated depreciation (c) The estimates were used in determining the depreciation amounts in part a are: Salvage value and useful life P9-5A: (a) The depreciable amount = 80,000 Annual depreciation = $80,000÷ = $10,000 Carrying amount at the beginning of 2018 = 80,000 – x $10,000 = $60,000 (b) ¼ x $60,000 = $15,000 the amount of the gain = $18,000 -$15,000 = $3,000 (c) Depreciation expense = $10,000 x 10/12 = $8,333 (d) The depreciable amount = $10,000 Annual depreciation = $10,000 ÷ = $1,250 Depreciation expense = $1,250 x 2/12 = $208.3 P9-6A: (a) Debit equipment $130,000 Credit cash $130,000 (b) Useful life = years  Straight line depreciation rate = 1/5= 20% per year Year Carrying value $130,000 $108,333 $103,999 $39,865 $31,892 Rate Depreciation Expense 2016 20% x 10/12 $21,667 2017 20% $21,667 2018 20% $20,800 2019 20% $7,973 2020 $21,891 Total $93,998 Debit Amortization Expense $130,000 x 20% x 5/12 = $10,833 Credit Accumulated Amortization $10,833 Accum Depreciation $21,667 $43,334 $64,134 $72,107 $93,998 Debit Amortization Expense $108,333 x 20% x 8/12 = $14,444 Credit Accumulated Amortization $14,444 Debit Amortization Expense $103,999 x 20% x 8/12 = $13,867 Credit Accumulated Amortization $13,867 (c) Accum depreciation = $43,334 + ( $103,999 x 20% 11/12 ) = $62,400 Carrying value = $130,000 - $62,400= $67,600 Loss on disposal = $67,600 - $60,000 = $7,600 Debit cash 60,000 Debit accumulated depreciation 62,400 Debit loss on disposal 7,600 Credit equipment 130,000 Carrying value = $130,000 - $62,400= $67,600 Gain on disposal = $80,000 - $67,600 = $12,400 Debit cash 80,000 Debit accumulated depreciation 62,400 Credit Gain on disposal 12,400 Credit equipment 130,000 Debit accumulated depreciation 62,400 Credit equipment 62,400 P9-7A: a) Debit Equipment $130,000 Credit Cash : $130,000 Carrying value (Dec 31) $108,333 $103,999 $39,865 $31,892 10,000 b) Years Depreciable cost Depreciation rate August 31, 2016 August 31, 2017 August 31, 2018 120,000 96,000 57,600 20% 40% 40% Depreciation expense 24,000 38,400 23,040 The depreciable amount = 130,000 – 10,000 = 120,000 The depreciation rate (straight-line method) per year = 120,000 / = 24,000 2016: Debit depreciation expense 24,000 Credit accumulated depreciation 24,000 2017: Debit depreciation expense 38,400 Credit accumulated depreciation 38,400 2018: Debit depreciation expense 23,040 Credit accumulated depreciation 23,040 c) Depreciation expense to 30,November,2018: $2880 Accumulated Depreciation = 24,000 + 38,400 + 23,040 + 2880 = 88,320 1.(Equipment book’s value - Accumulated Depreciation) = 41,680 Debit Cash $60,000 Debit Accumulated Depreciation $88,320 Credit equipment $130,000 Credit Gain of asset disposal $18320 2.(Equipment book’s value - Accumulated Depreciation) = 41,680 Debit Cash $80,000 Debit Accumulated Depreciation $88,320 Credit equipment $130,000 Credit Gain of asset disposal $38320 3.(Equipment book’s value - Accumulated Depreciation) = 41,680 Debit Accumulated Depreciation $88,320 Dedit Loss of asset disposal $41,680 Credit equipment $130,000 CRITICAL THINKING CT9-4: 1) The stakeholders include: Suppliers, customers, employees, general public, shareholders and employees among others In this situation, the stakeholders are the employees (Interest: Job security and an opportunity to meet their needs), shareholders (Interest: Their investment plus returns) and government (Interest: Compliance with the law and tax) 2) Benny Benson's proposed change will not affect the net income in 2017 but it will increase the net income in 2018 The annual depreciation expense in 2017 = ($3,000,000-$200,000) : = $560,000 The annual depreciation expense in 2018 Netbook value = $3,000,000 - Accumulated Depreciation Accumulated Depreciation = $560,000 x =$1,120,000 Netbook value = $3,000,000 - $1,120,000 = $1,880,000 The annual depreciation expense in 2018= ($1,880,000 - $500,000) : =$197,143 The lower annual depreciation expense in 2018 will result in a higher net income reported 3) The proposed change in useful life and the residual value will increase the company's profit margin and decrease its asset turnover ratios Profit margin= Net Income/ sales; the proposed change in useful life and the residual value will result in a higher net income, the higher the net income the higher the profit margin Asset turnover ratio= Sales / Average Total assets; The proposed change in useful life and the residual value will result in a lower depreciation charge hence a higher Average Total asset, the higher the Average Total assets, the lower the asset turnover ratio 4) It is unethical for management to intentionally give misleading information just to show favorable financial results Therefore, the proposed change in useful life and the residual value is unethical since the president intentionally wants to reduce the annual depreciation expense to report high net income.The management is expected to be transparent, accountable and responsible to all its stakeholders They should not give false statements or certify what they knows as untrue to be true INTRODUCTION TO FINANCIAL ACCOUNTING (VERSION 2019B) by Dauderis, H & Annand, D – DISCUSSION QUESTIONS DQ The effort required to capitalize and amortize an inexpensive item is so much greater than the benefit, large companies set a dollar limit to determine the amount at which an expenditure is considered capital in nature DQ Is the amount material? Does it enhance/extend the life/service potential of the equipment? Would it benefit more than the current accounting period? DQ The cost of the newly-acquired asset is determined of the fair value of the asset that was given up If the fair value of the asset that was given up is unknown, then the cost is the fair value of the newly acquired asset DQ 11 Calculating depreciation using the double declining balance method is made without adjusting for the residual value Straight-line depreciation adjusts for residual value DQ 12 x DQ 24 Intangible assets unlike property, plant, and equipment, cannot be touched or otherwise sensed They are the same as PPE in that they represent future economic benefits to an entity over more than one accounting period EXERCISES E8-2 Cost of land = 100,000 x = 75,000 Cost of buildings = 300,000 x = 225,000 Debit account 211 75,000 + 225,000 = 300,000 Credit account 111 300,000 E8-3 a Cost of the laser printer = 3,575 + 100 + 350 = 4,025 b The depreciable amount = 4,025 – 250 = 3,775 Annual depreciation = 3,775÷ = 755 Useful life = years  Straight line depreciation rate = 1/5= 20% per year Depreciation rate for double declining balance method = 40% Year Total Carrying value 4,025 2,415 1,449 869 521 Rate 40% 40% 40% 40% Depreciation Expense 1,610 966 580 348 271 3,775 E8-8 a The depreciable amount = 140,000 Annual depreciation = 140,000 ÷ = 28,000 December 31, 2019 Debit account 627 28,000 Credit account 214 28,000 b The depreciable amount = 50,000 Annual depreciation = 50,000÷ = 12,500 December 31, 2020 Debit account 627 28,000 + 12,500 = 40,500 Credit 214 40,500 E8-11 Carrying value = 60,000- 40,000= 20,000 a Debit account 111 20,000 Debit account 214 40,000 Credit account 211 60,000 b Gain on disposal = 30,000 – 20,000 = 10,000 Debit account 111 30,000 Debit account 214 40,000 Accum Depreciation 1,610 2,576 3,156 3,504 3,775 Carrying value (Dec 31) 2,415 1,449 869 521 250 Credit account 711 10,000 Credit account 211 60,000 c Loss on disposal = 20,000 – = 15,000 Debit account 111 5,000 Debit account 214 40,000 Debit account 811 15,000 Credit account 211 60,000 E8-12 a Debit account 213 50,000 Credit account 111 50,000 b The depreciable amount = 50,000 Annual depreciation = 50,000 ÷ = 10,000 Depreciation expense = 10,000 x 10/12 = 8,333 Debit account 623 8,333 Credit account 214 8,333 c Accum depreciation = 8,333 + 10,000 + 10,000 x 9/12 = 25,833 Carrying value = 50,000 - 25,833 = 24,167 Gain on disposal = 100,000 - 24,167 = 75,833 Debit account 111 100,000 Debit account 214 25,833 Credit account 711 75,833 Credit account 211 50,000 PROBLEMS P8-2 The depreciable amount = 30,000 - 8,000 = 22,000 a Units of Production = 22,000 / 80,000 x 15,000 = 4,125 b Annual depreciation = 22,000/6 = 3,667 Depreciation expense= 50% x 3,667 = 1,833 c Useful life = years  Straight line depreciation rate = 1/6 per year Depreciation rate for double declining balance method = 1/3 Depreciation expense = 30,000 x 1/3 x 50% = 4,950 Carrying amount = cost – accumulated depreciation Units of Production: 25,075 Straight-line: 28,167 Double-declining balance: 25,050 Units of Production: 22,000 / 80,000 x 25,000 = 6,875 Straight-line: 3,667 Double-declining balance: (30,000 - 4,950) x 1/3 = 8,267 P8-3 Depreciation = = 10 2019: 2,000 x 10 =20,000 2020: 3,000 x 10 =30,000 2021: 2,800 x 10 =28,000 2022: 1,200 x 10 = 12,000 accumulated depreciation at the end of 2022 = 20,000 + 30,000 + 28,000 + 12,000 = 90,000 carrying amount = 95,000 - 90,000 = 5,000 Gain on disposal = 12,000 – 5,000 = 7,000 Debit account 111 12,000 Debit account 214 90,000 Credit account 711 7,000 Credit account 211 95,000 P8-4 total cost of the equipment = 35,000 + 1.200 + 5,700 = 41,900 straight-line method Depreciation = = 5,975 Debit account 623 5,975 Credit account 214 5,975 double-declining balance method Useful life = years  Straight line depreciation rate = 25% per year Depreciation rate for double declining balance method = 50% Year Carrying Rate Depreciation Carrying value value Expense (Dec 31) 2017 41,900 50% 20,950 20,950 2018 20,950 50% 2019 10,475 50% 2020 5,237.5 50% Total Debit account 623 20,950 Credit account 214 20,950 10,475 5,237.5 2,618.75 10,475 5,237.5 2,618.75 Debit account 623 10,475 Credit account 214 10,475 Debit account 623 5,237.5 Credit account 214 5,237.5 Debit account 623 2,618.75 Credit account 214 2,618.75 Depreciation = 5,975 x = 17,925 Carrying amount = 41,900 - 17,925 = 23,975 Annual depreciation = = 5,988 P8-5 Depreciation 2011 = x 50% = 1,629.2 Depreciation 2012-2017 = x = 19,550 Total depreciation = 21,179.2 Carrying amount = 115,000 – 21,179.2 = 93,820.8 Revised depreciation 2018: = 5,054.72 Debit account 623 5,054.72 Credit account 214 5,054.72 Debit account 623 5,054.72 x 50% =2,527.36 Credit account 214 2,527.36 accumulated depreciation = 21,179.2 + 5,054.72 + 2,527.36 = 28,761.28 carrying amount = 115,000 - 28,761.28 = 86,238.72 Loss on diposal = 80,000 - 86,238.72 = 6,238.72 Debit account 111 80,000 Debit account 214 28,761.28 Debit account 811 6,238.72 Credit account 211 115,000 P8-8 Debit account 211 3,000 Credit account 111 3,000 Debit account 211 1,000 Credit account 111 1,000 Debit account 211 2,000 Credit account 111 2,000 depreciation expense 2018 = (3,000 + 1,000) x 1/3 x 50% = 667 Debit account 623 667 Credit account 214 667 depreciation expense 2019 = (3,000 + 1,000 + 2,000 – 667) x 50% = 2,667 Debit account 623 2,667 Credit account 214 2,667 INTERMEDIATE FINANCIAL ACCOUNTING - VOLUME (2019 - REVISION A) by Arnold, G & Kyle, S – EXERCISES (Chapter 9) E9-1 total cost of the equipment purchased = 78,400 + 3,300 + 5,600 + 4,100 + 2,200 + 1,300 + 2,400 – 8,000 = 89,300 E9-3 Specialized lathe 30,000 x = 26,400 Robotic assembly machine $ 90,000 x =79,200 Laser guided cutting machine $110,000 x = 96,800 Delivery truck $ 20,000 x = 17,600 E9-4 a Prabhu Debit account 211(new) 19,000 Debit account 241 10,000 Credit account 211(old) 25,000 Credit account 111 2,000 Credit account 711 2,000 Zhang Debit account 211(new) 17,000 Debit account 241 8,000 Debit account 111 2,000 Credit account 211(old) 21,000 Credit account 711 6,000 b Prabhu Debit account 211(new) 17,000 Debit account 241(old) 10,000 Credit account 111 2,000 Credit account 211(old) 25,000 Zhang Debit account 211(new) 11,000 Debit account 241(old) 5,000 Debit account 111 2,000 Credit account 211(old) 21,000 c Prabhu Debit account 211(new) 19,000 Debit account 214(old) 5,000 Debit account 811 3,000 Credit account 211(old) 25 ,000 Credit account 111 2,000 Zhang Debit account 211(new) 11,000 Debit account 214(old) 8,000 Dedit account 111 2,000 Credit account 211(old) 21 ,000 E9-5 Debit account 211 80,000 Credit account 411 80,000 Debit account 211 46,284 Credit account 331 41,284 Credit account 111 5,000 INTERMEDIATE FINANCIAL ACCOUNTING - VOLUME (2019 - REVISION A) by Arnold, G & Kyle, S – EXERCISES (Chapter 10) E10-2 The depreciable amount = 10,000 – 1,000 = 9,000 Annual depreciation = 9,000/ = 3,000 a December 31, 2015: 3,000 x 6/12 = 1,500 ending carrying value = 10,000 – 1,500 = 8,500 b December 31, 2016: 3,000 ending carrying value = 8,500 – 3,000 = 5,500 c December 31, 2017: 3,000 ending carrying value = 5,500 – 3,000 = 2,500 d December 31, 2018: 3,000 x 6/12 = 1,500 ending carrying value = 2,500 – 1,500 = 1,000 E10-3 The depreciable amount = 39,000 – 4,000 = 35,000 Annual depreciation = 35,000/ = 7,000 Depreciation three years = 7,000 x = 21,000 The depreciable amount for 2016 = 39,000 - 21,000 – 5,000 = 13,000 Annual depreciation = 13,000/ = 3,250 Debit account 627 3,250 Credit account 214 3,250 E10-4 a The depreciable amount = 450,000 – 90,000 = 360,000 Annual depreciation = 35,000/ 30 = 12,000 Total depreciation = 12,000 x = 72,000 b The depreciable amount = 450,000 –72,000 + 30,000 - 50,000 = 358,000 Annual depreciation = 358,000/ (30-6+10) = 10,529 Total depreciation = 10,529 x = 84,232 c The depreciable amount = 450,000 –72,000 + 30,000 - 84,232= 323,768 Annual depreciation = 323,768/ (30-6+10-8) = 12,453 E10-8 a Debit account 111 450,000 Debit account 214 430,000 Debit account 811 70,000 Credit account 211 950,000 b Debit account 111 750,000 Debit account 214 430,000 Credit account 711 230,000 Credit account 211 950,000 c Debit account 214 430,000 Debit account 811 520,000 Credit account 211 950,000 d Debit account 214 430,000 Debit account 811 600,000 Credit account 711 80,000 Credit account 211 950,000 ... units-of-production method The depreciable amount = $290,000 The depreciation = $290,000/ 6,200 = $46 .77 per unit in 2018: $46 .77 x 940 = $43 ,9 64 in 2019: $46 .77 x 1 ,46 0 = $68,2 84 in 2020: $46 .77... declining balance method = 40 % Year Total Carrying value 4, 025 2 ,41 5 1 ,44 9 869 521 Rate 40 % 40 % 40 % 40 % Depreciation Expense 1,610 966 580 348 271 3,775 E 8-8 a The depreciable amount = 140 ,000 Annual... P 9-4 A: (1) the straight-line method The depreciable amount = $ 244 ,000 – $4, 000= $ 240 ,000 Annual depreciation = $ 240 ,000 ÷ = $60,000 Total depreciation = $ 240 ,000 (2) the double-diminishing-balance