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Friday, 14 March 2014

The following are the transactions of Morrell Corporation.

The following are the transactions of Morrell Corporation.  
a.  Morrell Corporation disposed of two computers at the end of their useful lives. The computers had cost $3,200 and their Accumulated depreciation was $3,200. No residual value was received.
b.  Assume the same information as (a),except that Accumulated depreciation, updated to the date of disposal, was $2,500.

Required:
Prepare journal entries to record these transactions (Omit the "$" sign in your response):
 
Event General Journal Debit Credit
a.   Accumulated depreciation    
         Computers    
       
b.   Accumulated depreciation    
    Loss on disposal    
         Computers    

An equipment was purchased at a cost of $33,400 on September 1, 2010. The equipment has an estimated residual value of $2,790 and an estimated useful life of five years or 20,200 hours. Assume the equipment was used for 1,080 hours from September 1 to December 31.

An equipment was purchased at a cost of $33,400 on September 1, 2010. The equipment has an estimated residual value of $2,790 and an estimated useful life of five years or 20,200 hours. Assume the equipment was used for 1,080 hours from September 1 to December 31.
 
Required:
Calculate the amount of depreciation to report during the year ended December 31, using following methods(Round your answers to the nearest dollar amount. Omit the "$" sign in your response):

 Straight-line $  
 Double-declining-balance $  
 Units-of-production $  
 

Explanation:

As part of a major renovation at the beginning of the year, Hauser Pharmaceuticals, Inc., sold shelving

As part of a major renovation at the beginning of the year, Hauser Pharmaceuticals, Inc., sold shelving units (store fixtures) that were 9 years old for $1,210 cash. The shelves originally cost $5,190 and had been depreciated on a straight-line basis over an estimated useful life of 9 years with an estimated residual value of $420. Assuming that depreciation has been recorded to the date of sale, show the effect of the disposal on the accounting equation.
     
Required:
(a)
Assuming that depreciation has been recorded to the date of sale, show the effect of the disposal on the accounting equation. Indicate the effects (accounts, amounts, and + , – , or "NE" for no effect) of the transaction.
  
Assets = Liabilities + Stockholders' Equity
 Cash +1,210   No effect NE   Gain on disposal +790
 Store fixtures -5,190            
 Accumulated depreciation +4,770            

   
(b) Prepare the journal entry to record the sale of the shelving units. (Omit the "$" sign in your response.)
     
General Journal Debit Credit
  Cash    
  Accumulated depreciation on store fixtures    
       Store fixtures    
       Gain on sale of store fixtures    


rev: 10_14_2011

Explanation:
 
  Store fixtures (original cost) $ 5,190  
  Accumulated depreciation at the end of 9 year    
     Depreciation expense = ($5,190 cost – $420 residual value) × 1/9 = $530    
     Accumulated depreciation = $530 annual depreciation expense × 9 yrs =   4,770  
 

  Book value at the end of tenth year (i.e., immediately prior to sale) $ 420  
 




 
  Proceeds on sale $ 1,210    
  Book value   (420 )  
 


 
  Gain on sale $ 790    
 





 

The cost of the two-year-old machine is $210,000. It has an estimated residual value of $40,000, and has an estimated useful life of four years. The company uses straight-line depreciation.

The cost of the two-year-old machine is $210,000. It has an estimated residual value of $40,000, and has an estimated useful life of four years. The company uses straight-line depreciation.

Required:
Calculate the book value of the machine at the end of second year. (Omit the "$" sign in your response.)
 
  Book value $  
 

Explanation:  
   
  Machinery (original cost) $ 210,000  
  Accumulated depreciation at end of year 2    
    Depreciation expense = ($210,000 cost – $40,000 residual value) ×
      1/4 years = $42,500
   
    Accumulated depreciation = $42,500 annual depreciation expense × 2 yrs =   85,000  
 

  Book value at the end of the second year $ 125,000  
 



Kreiser Company had three intangible assets at the end of 2010 (end of the accounting year): a. A patent purchased from J. Miller on January 1, 2010, for a cash cost of $6,100. When purchased, the patent had an estimated life of fifteen years.

Kreiser Company had three intangible assets at the end of 2010 (end of the accounting year):

a.
A patent purchased from J. Miller on January 1, 2010, for a cash cost of $6,100. When purchased, the patent had an estimated life of fifteen years.
b.
A trademark was registered with the federal government for $12,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life.
c.
Computer licensing rights were purchased on January 1, 2010, for $67,000. The rights are expected to have a four-year useful life to the company.

Requirement 1:
Compute the acquisition cost of each intangible asset. (Omit the "$" sign in your response.)

  Acquisition cost
  Patent $   
  Trademark   
  Licensing rights   

 
Requirement 2:
Compute the amortization of each intangible for the year ended December 31, 2010. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

  Amortization expense
 Patent $   
 Trademark   
 Licensing rights   

 
Requirement 3:
Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2010. (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

   
  Income statement for 2010:  
       Amortization expense $  

 
     
  Balance sheet at December 31, 2010:    
    Intangibles:    
       Patent, net $    
       Trademark      
       Licensing rights, net      
 

    Total Intangibles $    
 




 

Explanation:

On January 1, 2010, the records of Tuff Turf Corporation (TTC) showed the following regarding production equipment:

On January 1, 2010, the records of Tuff Turf Corporation (TTC) showed the following regarding production equipment:  
     
  Equipment (estimated residual value, $2,200) $ 16,800  
  Accumulated depreciation (straight-line, one year)   2,920  


Required:
Based on the data given, compute the estimated useful life of the equipment. (Round your answer to the nearest whole number.)
 
  Estimated useful life years  
 

Explanation:
Depreciation expense per year: = $2,920
 
Estimated useful life:
($16,800 − $2,200) × 1/? useful life = $2,920 per year
$14,600 / $2,920 = 5 years useful life

Bridge City Consulting bought a building and the land on which it is located for $169,400 cash. The land is estimated to represent 60 percent of the purchase price. The company paid $28,000 for building renovations before it was ready for use.

Bridge City Consulting bought a building and the land on which it is located for $169,400 cash. The land is estimated to represent 60 percent of the purchase price. The company paid $28,000 for building renovations before it was ready for use.
 
Requirement 1:
The renovation costs should be capitalized.

True
 
Requirement 2:
Give the journal entry to record all expenditures. Assume that all transactions were for cash and they occurred at the start of the year. (Omit the "$" sign in your response.)

General-Journal Debit Credit
  Land    
  Buildings    
       Cash    

 
Requirement 3:
Compute straight-line depreciation on the building at the end of one year, assuming an estimated 13-year useful life and a $14,400 estimated residual value.(Round your answer to the nearest whole number. Omit the "$" sign in your response.)
 
 Depreciation $  

Requirement 4:
What should be the book value of the land and building at the end of year 2? (Round your answer to the nearest whole number. Omit the "$" sign in your response.)

 Book value $  
 

Explanation: