会计英语答案ch10.docx
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会计英语答案ch10.docx
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会计英语答案ch10
CHAPTER10
FIXEDassetsandintangibleassets
cLASSdiscussionquestions
1.a.Tangible
b.Capableofrepeateduseintheoperationsofthebusiness
e.Long-lived
2.a.Property,plant,andequipment
b.Currentassets(merchandiseinventory)
3.Realestateacquiredasspeculationshouldbelistedinthebalancesheetunderthecaption"Investments,"belowtheCurrentAssetssection.
4.$375,000
5.Ordinarilynot;ifthebookvaluescloselyapproximatethemarketvaluesoffixedassets,itiscoincidental.
6.a.No,itdoesnotprovideaspecialcashfundforthereplacementofassets.Unlikemostexpenses,however,depreciationexpensedoesnotrequireanequivalentoutlayofcashintheperiodtowhichtheexpenseisallocated.
b.Depreciationisthecostoffixedassetsperiodicallychargedtorevenueovertheirexpectedusefullives.
7.12years
8.a.No
b.No
9.a.Anaccelerateddepreciationmethodismostappropriateforsituationsinwhichthedeclineinproductivityorearningpoweroftheassetisproportionatelygreaterintheearlyyearsofusethaninlateryears,andtherepairstendtoincreasewiththeageoftheasset.
b.Anaccelerateddepreciationmethodre-ducesincometaxpayabletotheIRSintheearlierperiodsofanasset’slife.Thus,cashisfreedupintheearlierperiodstobeusedforotherbusinesspurposes.
c.MACRSwasenactedbytheTaxReformActof1986andprovidesfordepreciationforfixedassetsacquiredafter1986.
10.No.AccountingPrinciplesBoardOpinionNo.20,AccountingChanges,isquitespecificaboutthetreatmentofchangesindepreciable
assets’estimatedservicelives.Suchchangesshouldbereflectedintheamountsfordepreciationexpenseinthecurrentandfutureperiods.Theamountsrecordedfordepreciationexpenseinthepastarenotaffected.
11.Capitalexpendituresarerecordedasassetsandincludethecostofacquiringfixedassets,addingacomponent,orreplacingacomponentoffixedassets.Revenueexpendituresarerecordedasexpensesandarecoststhatbenefitonlythecurrentperiodandareincurredfornormalmaintenanceandrepairsoffixedassets.
12.Capitalexpenditure(componentreplacement)
13.a.No,theaccumulateddepreciationforanassetcannotexceedthecostoftheasset.Todosowouldcreateanegativebookvalue,whichismeaningless.
b.Thecostandaccumulateddepreciationshouldberemovedfromtheaccountswhentheassetisnolongerusefulandisremovedfromservice.Presumably,theassetwillthenbesold,tradedin,ordiscarded.
14.a.Allpurchasesoffixedassetsshouldbeapprovedbyanappropriatelevelofmanagement.Inaddition,competitivebidsshouldbesolicitedtoensurethatthecompanyisacquiringtheassetsatthelowestpossibleprice.
b.Aphysicalcountoffixedassetswillverifytheaccuracyofaccountingrecords.Itwillalsodetectmissingfixedassetsthatshouldberemovedfromtherecordsandobsoleteoridlefixedassetsthatshouldbedisposedof.
15.a.Overtheyearsofitsexpectedusefulness
b.Expenseasincurred
c.Goodwillshouldnotbeamortized,butwrittendownwhenimpaired.
EXERCISES
Ex.10–1
a.Newprintingpress:
1,2,3,4,5
b.Secondhandprintingpress:
8,9,10,12
Ex.10–2
a.Yes.Allexpendituresincurredforthepurposeofmakingthelandsuitableforitsintendeduseshouldbedebitedtothelandaccount.
b.No.Landisnotdepreciated.
Ex.10–3
Initialcostofland($35,000+$125,000)$160,000
Plus:
Legalfees$1,100
Delinquenttaxes12,500
Demolitionofbuilding18,00031,600
$191,600
Less:
Salvageofmaterials3,600
Costofland$188,000
Ex.10–4
a.No.The$859,600representstheoriginalcostoftheequipment.Itsreplacementcost,whichmaybemoreorlessthan$859,600,isnotreportedinthefinancialstatements.
b.No.The$317,500istheaccumulationofthepastdepreciationchargesontheequipment.Therecognitionofdepreciationexpensehasnorelationshiptothecashaccountoraccumulationofcashfunds.
Ex.10–5
(a)5%,(b)4%,(c)2½%,(d)25%,(e)20%,(f)10%,(g)2%
Ex.10–6
$18,000[($312,000–$42,000)÷15]
Ex.10–7
=$4.36depreciationperhour
1,250hoursat$4.36=$5,450depreciationforJuly
Ex.10–8
a.Creditto
Accumulated
TruckNo.RateperMileMilesOperatedDepreciation
120.0cents40,000$8,000
221.012,0002,100*317.536,0006,300
420.021,0004,200
Total$20,600
*Mileagedepreciationof$2,520(21cents×12,000)islimitedto$2,100,whichreducesthebookvalueofthetruckto$6,600,itsresidualvalue.
b.DepreciationExpense—Trucks20,600
AccumulatedDepreciation—Trucks20,600
Ex.10–9
FirstYearSecondYear
a.81/3%of$84,000=$7,00081/3%of$84,000=$7,000
b.162/3%of$84,000=$14,000162/3%of$70,000*=$11,667
*$84,000–$14,000
Ex.10–10
a.10%of($98,500–$7,500)=$9,100
b.Year1:
20%of$98,500=$19,700
Year2:
20%of($98,500–$19,700)=$15,760
Ex.10–11
a.Year1:
9/12×[($54,000–$10,800)÷12]=$2,700
Year2:
($54,000–$10,800)÷12=$3,600
b.Year1:
9/12×162/3%of$54,000=$6,750
Year2:
162/3%of($54,000–$6,750)=$7,875
Ex.10–12
a.$15,000[($800,000–$200,000)÷40]
b.$500,000[$800,000–($15,000×20yrs.)]
c.$14,000[($500,000–$150,000)÷25yrs.]
Ex.10–13
a.
CurrentPreceding
YearYear
Landandbuildings$426,322,000$418,928,000
Machineryandequipment1,051,861,0001,038,323,000
Totalcost$1,478,183,000$1,457,251,000
Accumulateddepreciation633,178,000582,941,000
Bookvalue$845,005,000$874,310,000
Acomparisonofthebookvaluesofthecurrentandprecedingyearsindicatesthattheydecreased.AcomparisonofthetotalcostandaccumulateddepreciationrevealsthatInterstateBakeriespurchased$20,932,000($1,478,183,000–$1,457,251,000)ofadditionalfixedassets,whichwasoffsetbytheadditionaldepreciationexpenseof$50,237,000($633,178,000–$582,941,000)takenduringthecurrentyear.
b.Thebookvalueoffixedassetsshouldnormallyincreaseduringtheyear.Althoughadditionaldepreciationexpensewillreducethebookvalue,mostcompaniesinvestinnewassetsinanamountthatisatleastequaltothedepreciationexpense.However,duringperiodsofeconomicdownturn,companiespurchasefewerfixedassets,andthebookvalueoftheirfixedassetsmaydecline.ThisisapparentlythecasewithInterstateBakeries.
Ex.10–14
Capitalexpenditures:
Newcomponent:
4,6,7
Replacementcomponent:
1,2,9,10
Revenueexpenditures:
3,5,8
Ex.10–15
Capitalexpenditures:
Newcomponent:
4,6,7
Replacementcomponent:
2,5,8,9,10
Revenueexpenditures:
1,3
Ex.10–16
a.Mar.15RemovalExpense1,500
Cash1,500
b.Mar.15DepreciationExpense6,000
AccumulatedDepreciation6,000
15AccumulatedDepreciation18,000
Carpet18,000
30Carpet45,000
Cash45,000
c.Dec.31DepreciationExpense2,250*
AccumulatedDepreciation2,250
*($45,000÷15years)×9/12
Ex.10–17
a.Initialcostofoldalarmsystem$50,000
Accumulateddepreciationfromoldsystem35,000*
Bookvalueofoldsystemchargedto
depreciationexpense$15,000
2006depreciationexpenseonnewcomponent12,000
Totaldepreciationexpense$27,000
*($50,000/10years)×7years
b.Totaldepreciationexpense(from[a])$27,000
Removalexpense2,000
Totalexpensefor2006$29,000
Ex.10–18
a.Costofequipment$240,000
AccumulateddepreciationatDecember31,2006
(4yearsat$22,500*peryear)90,000
BookvalueatDecember31,2006$150,000
*($240,000–$15,000)÷10=$22,500
b.1.DepreciationExpense—Equipment11,250
AccumulatedDepreciation—Equipment11,250
2.Cash135,000
AccumulatedDepreciation—Equipment101,250
LossonDisposalofFixedAssets3,750
Equipment240,000
Ex.10–19
a.2003depreciationexpense:
$15,000[($96,000–$6,000)÷6]
2004depreciationexpense:
$15,000
2005depreciationexpense:
$15,000
b.$51,000($96,000–$45,000)
c.Cash38,000
AccumulatedDepreciation—Equipment45,000
LossonDisposalofFixedAssets13,000
Equipment96,000
d.Cash53,000
AccumulatedDepreciation—Equipment45,000
Equipment96,000
GainonDisposalofFixedAssets2,000
Ex.10–20
a.$205,000($315,000–$110,000)
b.$303,750[$315,000–($110,000–$98,750)],or
$303,750($205,000+$98,750)
Ex.10–21
a.$205,000($315,000–$110,000)
b.$315,000.Thenewprintingpress’scostcannotexceed$315,000onasimilarexchange.The$18,500lossondisposal($128,500bookvalue–$110,000trade-inallowance)mustberecognized.
Ex.10–22
a.DepreciationExpense—Equipment8,000
AccumulatedDepreciation—Equipment8,000
b.AccumulatedDepreciation—Equipment152,000
Equipment385,000
LossonDisposalofFixedAssets28,000
Equipment280,000
Cash35,000
NotesPayable250,000*
*$385,000–$100,000–$35,000
Ex.10–23
a.DepreciationExpense—Trucks1,500
AccumulatedDepreciation—Trucks1,500
b.AccumulatedDepreciation—Trucks37,500
Trucks76,000
Trucks62,500
Cash11,000
NotesPayable40,000*
*$80,000–$29,000–$11,000
Ex.10–24
a.$55,000.Thenewtruck’scostcannotexceed$55,000inasimilarexchange.
b.$54,000($55,000–$1,000)or
$54,000($30,000+$24,000)
Ex.10–25
ThemanagersatMarketNetCo.arenotrequiredtoobtainapprovalbeforedisposingoffixedassets.Managersmaybedisposingofassetsthatareingoodworkingorderandthatareneededatanotherlocationwithinthecompany.Alternatively,managersmaybepersuadedtosellusedassetstoemployeesandreplaceth
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