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]

eBook Linkreferences

 

 

 

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]
   



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]

 

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]

 

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]

 

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]

 

eBook Links (2)references

 

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.

 

 
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