10/29/2020 1. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Beaverton Lumber purchased milling equipment for $35,000. In addition to the purchase price, Beaverton made the following expenditures: freight, $1,500; installation, $3,000; testing, $2,000; personal property tax on the equipment for the first year, $500. What is the initial cost of the equipment? Initial cost of equipment $ 41,500 Explanation: Capitalized cost of the equipment: Purchase price Freight Installation Testing Total capitalized cost $35,000 1,500 3,000 2,000 $41,500 Note: Personal property taxes on the equipment for the period after acquisition are not part of acquisition cost. They are expensed in the period incurred. https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 2. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Fullerton Waste Management purchased land and a warehouse for $600,000. In addition to the purchase price, Fullerton made the following expenditures related to the acquisition: broker’s commission, $30,000; title insurance, $3,000; miscellaneous closing costs, $6,000. The warehouse was immediately demolished at a cost of $18,000 in anticipation of the building of a new warehouse. Determine the amounts Fullerton should capitalize as the cost of the land and the building. Capitalized cost of land $ 657,000 Capitalized cost of building Explanation: Capitalized cost of land: Purchase price Broker’s commission Title insurance Miscellaneous closing costs Demolition of old building Total capitalized cost $600,000 30,000 3,000 6,000 18,000 $657,000 All of the expenditures, including the costs to demolish the old building, are included in the initial cost of the land. https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 3. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Pro-tech Software acquired all of the outstanding stock of Reliable Software for $14 million. The book value of Reliable’s net assets (assets minus liabilities) was $8.3 million. The fair values of Reliable’s assets and liabilities equaled their book values with the exception of certain intangible assets whose fair values exceeded book values by $2.5 million. Calculate the amount paid for goodwill. (Enter your answer in whole dollars.) Goodwill $ 3,200,000 Explanation: Calculation of goodwill: Fair value of consideration given Less fair value of identifiable net assets acquired: Book value of assets Plus: Excess of fair value over book value of intangible assets Goodwill $ 14,000,000 $8,300,000 2,500,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 (10,800,000) $ 3,200,000 1/1 10/29/2020 4. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. Oaktree Company purchased new equipment and made the following expenditures: Purchase price Sales tax Freight charges for shipment of equipment Insurance on the equipment for the first year Installation of equipment $ 45,000 2,200 700 900 1,000 The equipment, including sales tax, was purchased on open account, with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Prepare the necessary journal entries to record the above expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction 1 1 General Journal Equipment Debit Credit 48,900 Accounts payable 47,200 Cash 2 2 Prepaid insurance 1,700 900 Cash 900 Explanation: Equipment ($45,000 + $2,200 + $700 + $1,000) = $48,900 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 5. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. In 2021, Bratten Fitness Company made the following cash purchases: 1. The exclusive right to manufacture and sell the X-Core workout equipment from Symmetry Corporation for $200,000. Symmetry created the unique design for the equipment. Bratten also paid an additional $10,000 in legal and filing fees to attorneys to complete the transaction. 2. An initial fee of $300,000 for a three-year agreement with Silver’s Gym to use its name for a new facility in the local area. Silver’s Gym has locations throughout the country. Bratten is required to pay an additional fee of $5,000 for each month it operates under the Silver’s Gym name, with payments beginning in March 2021. Bratten also purchased $400,000 of exercise equipment to be placed in the new facility. 3. The exclusive right to sell Healthy Choice, a book authored by Kent Patterson, for $25,000. The book includes healthy recipes, recommendations for dietary supplements, and natural remedies. Bratten plans to display the book at the check-in counter at its new facility, as well as make it available online. Required: Prepare a summary journal entry to record expenditures related to initial acquisitions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction 1 1 General Journal Debit Patent 210,000 Franchise 300,000 Equipment 400,000 Copyright 25,000 Cash Credit 935,000 Explanation: Patent: $200,000 + $10,000 = $210,000 Franchise: The ongoing expense each month of operating as a franchise would be expensed as incurred. https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 6. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. On March 1, 2021, Beldon Corporation purchased land as a factory site for $60,000. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2021. Costs incurred during this period are listed below: Demolition of old building Architect’s fees (for new building) Legal fees for title investigation of land Property taxes on land (for period beginning March 1, 2021) Construction costs Interest on construction loan $ 4,000 12,000 2,000 3,000 500,000 5,000 Salvaged materials resulting from the demolition of the old building were sold for $2,000. Required: Determine the amounts that Beldon should capitalize as the cost of the land and the new building. Complete this question by entering your answers in the tabs below. Cost of Land Cost of New Building Determine the amounts that Beldon should capitalize as the cost of the land. (Amounts to be deducted should be indicated with a minus sign.) Capitalized cost of land: Purchase price $ 60,000 Demolition of old building $ 4,000 Sale of materials (2,000) Legal fees for title investigation 2,000 Total cost of land F  $ 64,000 Cost of Land Cost of New Building  Explanation: Note: Property taxes on the land for the period after acquisition are not part of acquisition cost. They are expensed in the period incurred. Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 7. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows: Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities Book Value $ 6,000,000 11,000,000 1,000,000 4,000,000 6,000,000 Fair Value $ 7,500,000 14,000,000 1,500,000 4,000,000 5,500,000 Required: Calculate the amount paid for goodwill. Goodwill $ 3,500,000 Explanation: Calculation of goodwill: Fair value of consideration given Less: Fair value of identifiable net assets acquired: Fair value of identifiable assets acquired Less: Fair value of liabilities assumed $ 17,000,000 $23,000,000 (9,500,000) Goodwill (13,500,000) $ 3,500,000 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 8. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,000,000 in cash. The book value of Smith’s net assets (assets minus liabilities) was $7,800,000. The fair values of all of Smith’s assets and liabilities were equal to their book values with the following exceptions: Receivables Property, plant, and equipment Intangible assets Book Value $ 1,300,000 8,000,000 200,000 Fair Value $ 1,100,000 9,400,000 1,200,000 Required: Calculate the amount paid for goodwill. Goodwill $ 1,000,000 Explanation: Calculation of goodwill: Fair value of consideration given Less: Fair value of identifiable net assets acquired: Book value of net assets Plus: Fair value in excess of book value: Property, plant, and equipment Intangible assets Less: Book value in excess of fair value: Receivables $ 11,000,000 $ 7,800,000 1,400,000 1,000,000 (200,000) Goodwill https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 10,000,000 $ 1,000,000 1/1 10/29/2020 9. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Fullerton Waste Management purchased land and a warehouse for $600,000. In addition to the purchase price, Fullerton made the following expenditures related to the acquisition: broker’s commission, $30,000; title insurance, $3,000; miscellaneous closing costs, $6,000. Assume that Fullerton decides to use the warehouse rather than demolish it. An independent appraisal estimates the fair values of the land and warehouse at $420,000 and $280,000, respectively. Determine the amounts Fullerton should capitalize as the cost of the land and the building. Capitalized cost of land $ 383,400 Capitalized cost of building $ 255,600 Explanation: Cost of land and building: Purchase price Broker’s commission Title insurance Miscellaneous closing costs $600,000 30,000 3,000 6,000 $639,000 Total capitalized cost The total must be allocated to the land and building based on their relative fair values: Asset Land Building Fair Value $420,000 280,000 $700,000 Percent of Total Fair Value 60% 40 100% Initial Valuation (Percent × $639,000) $383,400 255,600 $639,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 10. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $ 16,000 5,000 36,000 4,000 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.3 and $1.1 million, respectively. Shortly after acquisition, Samtech spent $82,000 to construct a parking lot and $40,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $250,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter your answers in whole dollars.) Assets Initial Valuation Land $ 3,018,750 Building $ 1,006,250 Land improvements $ 122,000  Required 1 Required 2  Explanation: 1. Cost of land and building: Purchase price Title insurance Legal fees State transfer fees Total cost $4,000,000 16,000 5,000 4,000 $4,025,000 Note: The pro-rated property taxes for the period after acquisition are not included in the initial valuation of the land and building. They are recorded instead as prepaid taxes and expensed over the related period. The total is allocated to the land and building based on their relative fair values: Asset Land Building Fair Value $3,300,000 1,100,000 $4,400,000 Percent of Total Fair Value 75% 25% 100% Initial Valuation (% × $4,025,000) $3,018,750 1,006,250 $4,025,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/2 10/29/2020 Ch 10 Homework (max 220)-assigned Assets: Land Building Land improvements: Parking lot Landscaping $ 3,018,750 $ 1,006,250 $ $ 82,000 40,000 122,000 2. Cost of land: Purchase price Title insurance Legal fees State transfer fees Demolition of old building Less: Sale of materials Clearing and grading costs Total cost of land Land improvements: Parking lot Landscaping $4,000,000 16,000 5,000 4,000 $250,000 (6,000) 244,000 86,000 $4,355,000 $ 82,000 40,000 $ 122,000 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 2/2 10/29/2020 10. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $ 16,000 5,000 36,000 4,000 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.3 and $1.1 million, respectively. Shortly after acquisition, Samtech spent $82,000 to construct a parking lot and $40,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $250,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $250,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building. (Enter your answers in whole dollars.) Assets Initial Valuation Land $ 4,355,000 $ 122,000 Building Land improvements  Required 1 Required 2  Explanation: 1. Cost of land and building: Purchase price Title insurance Legal fees State transfer fees Total cost $4,000,000 16,000 5,000 4,000 $4,025,000 Note: The pro-rated property taxes for the period after acquisition are not included in the initial valuation of the land and building. They are recorded instead as prepaid taxes and expensed over the related period. The total is allocated to the land and building based on their relative fair values: Asset Land Building Fair Value $3,300,000 1,100,000 Percent of Total Fair Value 75% 25% Initial Valuation (% × $4,025,000) $3,018,750 1,006,250 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/2 10/29/2020 Ch 10 Homework (max 220)-assigned $4,400,000 Assets: Land Building Land improvements: Parking lot Landscaping 100% $4,025,000 $ 3,018,750 $ 1,006,250 $ $ 82,000 40,000 122,000 2. Cost of land: Purchase price Title insurance Legal fees State transfer fees Demolition of old building Less: Sale of materials Clearing and grading costs Total cost of land Land improvements: Parking lot Landscaping $4,000,000 16,000 5,000 4,000 $250,000 (6,000) 244,000 86,000 $4,355,000 $ 82,000 40,000 $ 122,000 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 2/2 10/29/2020 11. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. Pinewood Company purchased two buildings on four acres of land. The lump-sum purchase price was $900,000. According to independent appraisals, the fair values were $450,000 (building A) and $250,000 (building B) for the buildings and $300,000 for the land. Required: Determine the initial valuation of the buildings and the land. Initial Valuation Asset Building A $ 405,000 Building B 225,000 Land 270,000 Totals F $ 900,000 rev: 01_16_2020_QC_CS-195439 Explanation: Asset Land Building A Building B Totals Fair Value $ 300,000 450,000 250,000 $1,000,000 Percent of Total Fair Value 30% 45% 25% 100% Initial Valuation (% × $900,000) $270,000 405,000 225,000 $900,000 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 12. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Shackelford Corporation acquired a patent from its founder, Jim Shackelford, in exchange for 50,000 shares of the company’s no-par common stock. On the date of the exchange, the common stock had a fair value of $22 per share. Determine the cost of the patent. Cost of the patent $ 1,100,000 Explanation: The cost of the patent equals the fair value of the stock given in exchange: 50,000 × $22 = $1,100,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 Ch 10 Homework (max 220)-assigned [The following information applies to the questions displayed below.] On February 1, 2021, the Xilon Corporation issued 50,000 shares of its no-par common stock in exchange for five acres of land located in the city of Monrovia. On the date of the acquisition, Xilon’s common stock had a fair value of $18 per share. An office building was constructed on the site by an independent contractor. The building was completed on November 2, 2021, at a cost of $6,000,000. Xilon paid $4,000,000 in cash and the remainder was paid by the city of Monrovia. 13. Award: 8.00 points Required information Problems? Adjust credit for all students. Required: 1. Prepare the journal entries to record the acquisition of the land and the building. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date 1 February 01, 2021 General Journal Land Debit 900,000 Common stock 2 November 02, 2021 Building Credit 900,000 6,000,000 Cash 4,000,000 Revenue - donation of asset 2,000,000 Explanation: February 1, 2021 Common stock (50,000 shares × $18) = $900,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/2 10/29/2020 14. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. Required information 2. Assuming that Xilon prepares its financial statements according to International Financial Reporting Standards, select all the correct alternatives the company has for recording the acquisition of the office building. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Same treatment as GAAP. Deduct the amount of the grant in determining the initial cost of the office building. Record the grant as a liability, deferred income, in the balance sheet and recognize it in the income statement systematically over the office building's useful life. Explanation: As with U.S. GAAP, the building would be valued at fair value. However, the amount donated ($2,000,000) would not be recorded as revenue. Instead, IFRS requires that government grants be recognized in income over the periods necessary to match them on a systematic basis with the related costs that they are intended to compensate. For grants related to assets, companies can either (1) deduct the amount of the grant in determining the initial cost of the asset, or (2) record the grant as a liability, deferred income, in the balance sheet and recognize it in the income statement systematically over the asset’s useful life. https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 2/2 10/29/2020 15. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Huebert Corporation and Winslow Corporation reported the following information: Property, plant, and equipment (net) Net sales—2021 ($ in millions) Huebert Winslow 2021 2020 2021 2020 $210 $220 $680 $650 $1,850 $5,120 Calculate each company's fixed-asset turnover ratio and determine which company utilizes its fixed assets most efficiently to generate sales. (Round your answers to two decimal places.) Huebert Fixed-asset turnover ratio Most efficient at using fixed assets to generate sales: 8.60 Winslow 7.70 Huebert rev: 01_03_2020_QC_CS-191371 Explanation: Net sales ÷ Average PP&E = Fixed-asset turnover ratio Huebert: Winslow: $1,850 ÷ ($220 + $210) / 2 = 8.60 $5,120 ÷ ($680 + $650) / 2 = 7.70 Because Huebert has a higher ratio, we would conclude that it more efficiently generates sales with its fixed assets. https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 16. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. The balance sheets of Pinewood Resorts reported net fixed assets of $740,000 and $940,000 at the end of 2020 and 2021, respectively. The fixed-asset turnover ratio for 2021 was 3.25. Calculate Pinewood’s net sales for 2021. Net sales $ 2,730,000 Explanation: Average PP&E for 2021 = ($740,000 + $940,000) ÷ 2 = $840,000 Net sales ÷ Average PP&E = Fixed-asset turnover ratio ? ÷ $840,000 = 3.25 Average PP&E × Fixed-asset turnover ratio = Net sales $840,000 × 3.25 = $2,730,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 17. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. Nvidia Corporation, a global technology company located in Santa Clara, California, reported the following information in its 2017 financial statements ($ in millions): Balance sheets Property, plant, and equipment (net) Income statement Net sales for 2017 $ 2017 2016 521 $ 466 $ 6,910 Required: 1. Calculate the company’s 2017 fixed-asset turnover ratio. (Enter your answers in millions rounded to one decimal place.) Fixed-asset Turnover Ratio Choose Numerator: / Choose Denominator: Net sales / Average PP&E $ 6,910 / $ = Fixed-asset Turnover Ratio = Fixed-asset Turnover Ratio 493.5 = F 14 times Explanation: 1. ($ in millions) Average PP&E for 2017 = ($521 + $466) ÷ 2 = $493.5 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 18. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively. Assume Calaveras paid $8,000 in cash and the exchange has commercial substance. (1) At what amount will Calaveras value the pickup trucks? (2) How much gain or loss will the company recognize on the exchange? (1) Value of pickup trucks $ 25,000 (2) Loss on exchange $ 3,000 Explanation: 1. Pickup trucks = Fair value of equipment given, plus cash paid $17,000 + $8,000 = $25,000 2. Gain or loss to recognize on the exchange: Fair value of equipment given up Less: Book value of equipment Original cost of equipment Accumulated depreciation Loss on exchange of assets $ 17,000 $ 65,000 (45,000) (20,000) $ (3,000) https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 19. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $24,000, respectively. Assume Calaveras paid $8,000 in cash and the exchange has commercial substance. (1) At what amount will Calaveras value the pickup trucks? (2) How much gain or loss will the company recognize on the exchange? (1) Value of pickup trucks $ 32,000 (2) Gain on exchange $ 4,000 Explanation: 1. Pickup trucks = Fair value of equipment given, plus cash paid $24,000 + $8,000 = $32,000 2. Gain or loss to recognize on the exchange: Fair value of equipment given up Less: Book value of equipment Original cost of equipment Accumulated depreciation Gain on exchange of assets $ 24,000 $ 65,000 (45,000) (20,000) $ 4,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 20. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Cedric Company recently traded in an older model of equipment for a new model. The old model’s book value was $180,000 (original cost of $400,000 less $220,000 in accumulated depreciation) and its fair value was $200,000. Cedric paid $60,000 to complete the exchange which has commercial substance. Required: Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction 1 1 General Journal Debit Equipment - new 260,000 Accumulated depreciation 220,000 Equipment - old Credit 400,000 Cash 60,000 Gain on exchange of assets 20,000 rev: 01_16_2020_QC_CS-195439 Explanation: Equipment - new ($200,000 + $60,000) = $260,000 Gain on exchange of assets ($200,000 − $180,000) = $20,000 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 21. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Cedric Company recently traded in an older model of equipment for a new model. The old model’s book value was $180,000 (original cost of $400,000 less $220,000 in accumulated depreciation) and its fair value was $170,000. Cedric paid $60,000 to complete the exchange which has commercial substance. Required: Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction 1 1 General Journal Equipment - new Loss on exchange of assets Accumulated depreciation Debit Credit 230,000 10,000 220,000 Equipment - old Cash 400,000 60,000 rev: 01_16_2020_QC_CS-195439 Explanation: Equipment - new ($170,000 FV given + $60,000 cash paid) = $230,000 Loss on exchange of assets ($170,000 FV − $180,000 BV) = $10,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 22. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. The Bronco Corporation exchanged land for equipment. The land had a book value of $120,000 and a fair value of $150,000. Bronco paid the owner of the equipment $10,000 to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment? 2. Prepare the journal entry to record the exchange. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the fair value of the equipment? Fair value $ 160,000  Required 1 Required 2  rev: 01_16_2020_QC_CS-195439 Explanation: 1. Fair value of land + Cash given = Fair value of equipment $150,000 + $10,000 = $160,000 2. Equipment - new ($150,000 FV given + $10,000 cash paid) = $160,000 Gain on exchange of assets ($150,000 FV − $120,000 BV) = $30,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 22. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. The Bronco Corporation exchanged land for equipment. The land had a book value of $120,000 and a fair value of $150,000. Bronco paid the owner of the equipment $10,000 to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment? 2. Prepare the journal entry to record the exchange. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction 1 1 General Journal Debit Equipment - new Credit 160,000 Land - old 120,000 Cash 10,000 Gain on exchange of assets 30,000  Required 1 Required 2  rev: 01_16_2020_QC_CS-195439 Explanation: 1. Fair value of land + Cash given = Fair value of equipment $150,000 + $10,000 = $160,000 2. Equipment - new ($150,000 FV given + $10,000 cash paid) = $160,000 Gain on exchange of assets ($150,000 FV − $120,000 BV) = $30,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 23. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. The Bronco Corporation exchanged land for equipment. The land had a book value of $120,000 and a fair value of $150,000. Bronco received $10,000 from the owner of the equipment to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment? 2. Prepare the journal entry to record the exchange. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the fair value of the equipment? Fair value $ 140,000  Required 1 Required 2  rev: 01_16_2020_QC_CS-195439 Explanation: 1. Fair value of land given − Cash received = Fair value of equipment $150,000 − $10,000 = $140,000 2. Equipment - new ($150,000 FV given − $10,000 cash received) = $140,000 Gain on exchange of assets ($150,000 FV − $120,000 BV) = $30,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 23. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. The Bronco Corporation exchanged land for equipment. The land had a book value of $120,000 and a fair value of $150,000. Bronco received $10,000 from the owner of the equipment to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment? 2. Prepare the journal entry to record the exchange. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction 1 1 General Journal Debit Equipment - new Credit 140,000 Cash 10,000 Land - old 120,000 Gain on exchange of assets  Required 1 30,000 Required 2  rev: 01_16_2020_QC_CS-195439 Explanation: 1. Fair value of land given − Cash received = Fair value of equipment $150,000 − $10,000 = $140,000 2. Equipment - new ($150,000 FV given − $10,000 cash received) = $140,000 Gain on exchange of assets ($150,000 FV − $120,000 BV) = $30,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 24. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. On January 1, 2021, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2022. Construction expenditures for 2021, which were incurred evenly throughout the year, totaled $6,000,000. Marjlee had the following debt obligations which were outstanding during all of 2021: Construction loan, 10% Long-term note, 7% $ 1,500,000 2,000,000 Required: Calculate the amount of interest capitalized in 2021 for the building using the specific interest method. Interest capitalized $ 255,000 Explanation: Average accumulated expenditures: $6,000,000 2 = $3,000,000 Interest capitalized: $3,000,000 −1,500,000 × 1,500,000 × 10% 7% = = $ 150,000 105,000 $ 255,000 = interest capitalized * Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 25. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. On January 1, 2021, the Shagri Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The only interest-bearing debt the company had outstanding during 2021 was long-term bonds with a book value of $10,000,000 and an effective interest rate of 8%. Construction expenditures incurred during 2021 were as follows: January 1 March 1 July 31 September 30 December 31 $ 500,000 600,000 480,000 600,000 300,000 Required: Calculate the amount of interest capitalized for 2021. Date Expenditure January 1 Average 500,000 x 12/12 = March 1 600,000 x 10/12 = 500,000 July 31 480,000 x 5/12 = 200,000 September 30 600,000 x 3/12 = 150,000 December 31 300,000 x 0/12 = Accumulated expenditure $ Weight F $ 2,480,000 F Amount Average accumulated expenditures F $ 1,350,000 $ 8 % 1,350,000 Capitalized Interest Interest Rate x $ 500,000 F $ 108,000 rev: 01_16_2020_QC_CS-195439 Explanation: No further explanation details are available for this problem. https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 26. Ch 10 Homework (max 220)-assigned Award: 7.00 points Problems? Adjust credit for all students. On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021(Hint: use Weighted-average rate of these two other debts): $5,000,000, 12% bonds $3,000,000, 8% long-term note Construction expenditures incurred during 2021 were as follows: January 1 March 31 June 30 September 30 December 31 $ 600,000 1,200,000 800,000 600,000 400,000 Required: Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).) Date Expenditure January 1 $ March 31 Weight Average 600,000 x 12/12 = $ 600,000 1,200,000 x 9/12 = 900,000 June 30 800,000 x 6/12 = 400,000 September 30 600,000 x 3/12 = 150,000 December 31 400,000 x 0/12 = Accumulated expenditure F $ 3,600,000 F Amount Average accumulated expenditures F $ Construction loan Other loans (not construction) $ $ 2,050,000 Capitalized Interest Interest Rate 2,050,000 1,500,000 x 8.0 % = F 550,000 x 10.5 % = F F $ 120,000 57,750 $ 177,750 rev: 01_16_2020_QC_CS-195439 Explanation: Weighted-average rate of all other debt: $ 5,000,000 × 3,000,000 × $ 8,000,000 $840,000 $8,000,000 12% 8% = $ 600,000 = 240,000 $ 840,000 = 10.5% https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 27. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. Thornton Industries began construction of a warehouse on July 1, 2021. The project was completed on March 31, 2022. No new loans were required to fund construction. Thornton does have the following two interest-bearing liabilities that were outstanding throughout the construction period (please use Weighted-average rate of these two debts): $2,000,000, 8% note $8,000,000, 4% bonds Construction expenditures incurred were as follows: July 1, 2021 September 30, 2021 November 30, 2021 January 30, 2022 $ 400,000 600,000 600,000 540,000 The company’s fiscal year-end is December 31. Required: Calculate the amount of interest capitalized for 2021 and 2022. Complete this question by entering your answers in the tabs below. 2021 2022 Calculate the amount of interest capitalized for 2021. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).) Date Expenditure July 1, 2021 $ Weight Average 400,000 x 6/6 = September 30, 2021 600,000 x 3/6 = November 30, 2021 600,000 x 1/6 = Accumulated expenditures F $ 1,600,000 F $ 100,000  x 2021 4.8 % $ 800,000 Capitalized Interest Interest Rate 800,000 400,000 300,000 F Amount Average accumulated expenditures $ x 6/12 2022 = F $ 19,200  rev: 01_16_2020_QC_CS-195439 Explanation: Interest capitalized in 2021: $800,000 × 4.8%* × 6/12 = $19,200 * Weighted-average rate of all debt: $ 2,000,000 8,000,000 $10,000,000 $480,000 $10,000,000 × 8% × 4% = $ 160,000 = 320,000 $ 480,000 = 4.8% Average accumulated expenditures for 2022: https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/2 10/29/2020 Ch 10 Homework (max 220)-assigned January 1, 2022 ($1,600,000 + $19,200) January 30, 2022 $1,619,200 × 3/3 = $ 1,619,200 540,000 × 2/3 = 360,000 $ 1,979,200 Interest capitalized in 2022: $1,979,200 × 4.8%* × 3/12 = $23,750 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 2/2 10/29/2020 27. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. Thornton Industries began construction of a warehouse on July 1, 2021. The project was completed on March 31, 2022. No new loans were required to fund construction. Thornton does have the following two interest-bearing liabilities that were outstanding throughout the construction period (please use Weighted-average rate of these two debts): $2,000,000, 8% note $8,000,000, 4% bonds Construction expenditures incurred were as follows: July 1, 2021 September 30, 2021 November 30, 2021 January 30, 2022 $ 400,000 600,000 600,000 540,000 The company’s fiscal year-end is December 31. Required: Calculate the amount of interest capitalized for 2021 and 2022. Complete this question by entering your answers in the tabs below. 2021 2022 Calculate the amount of interest capitalized for 2022. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).) Date Expenditure January 1, 2022 $ January 30, 2022 F $ Weight x 3/3 = 540,000 x 2/3 = 2,159,200 F $  x 2021 4.8 % 1,619,200 $ 1,979,200 Capitalized Interest Interest Rate 1,979,200 $ 360,000 F Amount Average accumulated expenditures Average 1,619,200 x 3/12 2022 = F $ 23,750  rev: 01_16_2020_QC_CS-195439 Explanation: Interest capitalized in 2021: $800,000 × 4.8%* × 6/12 = $19,200 * Weighted-average rate of all debt: $ 2,000,000 8,000,000 $10,000,000 $480,000 $10,000,000 × 8% × 4% = $ 160,000 = 320,000 $ 480,000 = 4.8% Average accumulated expenditures for 2022: January 1, 2022 ($1,600,000 + $19,200) $1,619,200 × 3/3 = $ 1,619,200 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/2 10/29/2020 Ch 10 Homework (max 220)-assigned January 30, 2022 540,000 × 2/3 = 360,000 $ 1,979,200 Interest capitalized in 2022: $1,979,200 × 4.8%* × 3/12 = $23,750 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 2/2 10/29/2020 28. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. On January 1, 2021, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 September 1, 2021 December 31, 2021 March 31, 2022 September 30, 2022 $200,000 $300,000 $300,000 $300,000 $200,000 Kendall borrowed $750,000 on a construction loan at 12% interest on January 1, 2021. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2021 and 2022. Average accumulated expenditures for 2022 was:  $536,000.  $1,236,000.  $1,200,000.  $1,036,000. January 1, 2021 September 1, 2021 December 31, 2021 $200,000 300,000 300,000 × 12/12 = $200,000 × 4/12 = 100,000 × 0/12 = 0 $800,000 $300,000 $300,000 × 12% = $36,000 Accumulated expenditures at 12/31/2021 March 31, 2022 September 30, 2022 $ 836,000 × 9/9 = $ 836,000 300,000 × 6/9 = 200,000 200,000 × 0/9 = 0 $1,336,000 $1,036,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 29. Ch 10 Homework (max 220)-assigned Award: 8.00 points Problems? Adjust credit for all students. Maxtor Technology incurred the following costs during the year related to the creation of a new type of personal computer monitor: Salaries Depreciation on R&D facilities and equipment Utilities and other direct costs incurred for the R&D facilities Patent filing and related legal costs Payment to another company for performing a portion of the development work Costs of adapting the new monitor for the specific needs of a customer $220,000 125,000 66,000 22,000 120,000 80,000 What amount should Maxtor report as research and development expense in its income statement? Research and development expense $ 531,000 Explanation: Research and development: Salaries Depreciation on R & D facilities and equipment Utilities and other direct costs Payment to another company Total R & D expense $220,000 125,000 66,000 120,000 $531,000 Note: The patent filing and related legal costs and the costs of adapting the product to a particular customer’s needs are not included as research and development expense. https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 30. Ch 10 Homework (max 220)-assigned Award: 9.00 points Problems? Adjust credit for all students. On January 1, 2021, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 September 1, 2021 December 31, 2021 March 31, 2022 September 30, 2022 $200,000 $300,000 $300,000 $300,000 $200,000 Kendall borrowed $750,000 on a construction loan at 12% interest on January 1, 2021. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2021 and 2022. Interest (using the specific interest method) capitalized for 2022 was: rev: 04_13_2020_QC_CS-207986, 06_27_2020_QC_CS-218310  $104,625.  $86,805.  $87,875.  $67,500. January 1, 2021 September 1, 2021 December 31, 2021 $200,000 300,000 300,000 × 12/12 = $200,000 × 4/12 = 100,000 × 0/12 = 0 $800,000 $300,000 $300,000 × 12% = $36,000 Accumulated expenditures at 12/31/2021 March 31, 2022 September 30, 2022 $ 836,000 × 9/9 = $ 836,000 300,000 × 6/9 = 200,000 200,000 × 0/9 = 0 $1,336,000 $1,036,000 Total Specific borrowing $1,036,000 750,000 × 12% × 9/12 = $ 67,500 Excess $ 286,000 × 9% × 9/12 = Capitalized interest 19,305 $86,805 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/2 10/29/2020 Ch 10 Homework (max 220)-assigned https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 2/2 10/29/2020 31. Ch 10 Homework (max 220)-assigned Award: 10.00 points Problems? Adjust credit for all students. Montgomery Industries spent $600,000 in 2020 on a construction project to build a library. Montgomery also capitalized $30,000 of interest on the project in 2020. Montgomery financed 100% of the construction with a 10% construction loan. The project was completed on September 30, 2021. Additional expenditures in 2021 were as follows: Feb. 28 Apr. 30 Jul. 1 Sept. 30 $ 90,000 180,000 36,000 64,000 Required: Determine the completed cost of the library. Completed cost of the library $ 1,060,900 rev: 01_25_2020_QC_CS-197070 Explanation: Expenditures Accumulated expenditures Dec. 31, 2020 Feb. 28, 2021 Apr. 30, 2021 Jul. 1, 2021 Sept. 30, 2021 Average accumulated expenditures for 2021 $ 630,000 90,000 180,000 36,000 64,000 Interest capitalized in 2021 ($812,000 × 10% × 9/12) 60,900 $1,060,900 Completed cost of the library × × × × × https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 9/9 7/9 5/9 3/9 0/9 = $630,000 = 70,000 = 100,000 = 12,000 = 0 $812,000 1/1 10/29/2020 32. Ch 10 Homework (max 220)-assigned Award: 10.00 points Problems? Adjust credit for all students. Hawkins Corporation began construction of a motel on March 31, 2021. The project was completed on April 30, 2022. No new loans were required to fund construction. Hawkins does have the following two interest-bearing liabilities that were outstanding throughout the construction period(use Weightedaverage rate of all debt): $4,000,000, 6% note $16,000,000, 10% bonds Construction expenditures incurred were as follows: March 31, 2021 June 30, 2021 November 30, 2021 February 28, 2022 $4,000,000 6,000,000 1,800,000 3,000,000 The company’s fiscal year-end is December 31. Required: Calculate the amount of interest capitalized for 2021 and 2022. (Round weighted average interest rate to 1 decimal places.) 2021 Amount of interest $ 565,800 2022 $ 425,218 Explanation: Average accumulated expenditures for 2021: March 31, 2021 June 30, 2021 November 30, 2021 $ 4,000,000 × 6,000,000 × 1,800,000 × $11,800,000 9/9 6/9 1/9 = $4,000,000 = 4,000,000 = 200,000 $8,200,000 Interest capitalized in 2021: $8,200,000 × 9.2%* × 9/12 $ 565,800 * Weighted-average rate of all debt: $ 4,000,000 × 6% 16,000,000 × 10% $20,000,000 = $ 240,000 = 1,600,000 $1,840,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/2 10/29/2020 Ch 10 Homework (max 220)-assigned $1,840,000 = 9.2% $20,000,000 Average accumulated expenditures for 2022: January 1, 2022 ($11,800,000 + $565,800) February 28, 2022 $12,365,800 × 3,000,000 × 4/4 2/4 = $12,365,800 = 1,500,000 $13,865,800 Interest capitalized in 2022: $13,865,800 × 9.2%* × 4/12 $ 425,218 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 2/2 10/29/2020 33. Ch 10 Homework (max 220)-assigned Award: 7.00 points Problems? Adjust credit for all students. Delaware Company incurred the following research and development costs during 2021: Salaries and wages for lab research Materials used in R&D projects Purchase of equipment Fees paid to third parties for R&D projects Patent filing and legal costs for a developed product Salaries, wages, and supplies for R&D work performed for another company under a contract Total $ 400,000 200,000 900,000 320,000 65,000 350,000 $ 2,235,000 The equipment has a seven-year life and will be used for a number of research projects. Depreciation for 2021 is $120,000. Required: Calculate the amount of research and development expense that Delaware should report in its 2021 income statement. Explanation: Research and development expense: Salaries and wages for lab research Materials used in R&D projects Fees paid to third parties for R&D projects Depreciation on R&D equipment Total $ 400,000 200,000 320,000 120,000 $1,040,000 The patent filing and legal costs are capitalized as the cost of the patent. The salaries, wages, and supplies for R&D performed for another company are included as inventory and expensed as cost of goods sold either when revenue is recognized at the completion of the contract or as revenue is recognized over the life of the contract based on the percentage complete. Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 34. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. In February 2021, Culverson Company began developing a new software package to be sold to customers. The software allows people to enter health information and daily eating and exercise habits to track their health status. The project was completed in November 2021 at a cost of $800,000. Of this amount, $300,000 was spent before technological feasibility was established. Culverson expects a useful life of two years for the new product and total revenues of $1,500,000. Determine the amount that Culverson should capitalize as software development costs in 2021. Software development cost $ 500,000 Explanation: The software costs to be capitalized include those made after technological feasibility = $500,000 ($800,000 − $300,000). https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 35. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. In March 2021, Price Company began developing a new software system to be used internally for managing its inventory. The software integrates customer orders with inventory on hand to automatically place orders for additional inventory when needed. The software then automatically records inventory as the shipment is received and read by scanners. The software development was completed in October 2021 at a cost of $150,000. Of this amount, $25,000 was spent before the application development stage was established. Price expects to use the software for at least five years. Determine the initial amount that Price should capitalize as software development costs. Capitalized costs $ 125,000 Explanation: The software costs to be capitalized include those incurred after application development = $125,000 ($150,000 − $25,000). https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 36. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. Maltese Laboratories incurred the following research and developments costs related to its pharmaceutical business: Internal projects (salaries, supplies, overhead for R&D facilities) Payment to acquire R&D from a third party related to a specific project Costs of an R&D project to be sold under contract to Libo Pharmacy, a third party In-process R&D associated with the acquisition of Curatics, an independent research company. $620,000 75,000 82,000 148,000 What amount should Maltese report as research and development expense in its income statement? Research and development expense $ 695,000 Explanation: Research and development: Internal projects Payment to acquire R & D from a third party Total R & D expense $620,000 75,000 $695,000 Note: The costs of an R&D project to be sold under contract would be included as part of inventory. The in-process R&D associated with the acquisition would be recorded as an indefinite-life intangible asset. https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 37. Ch 10 Homework (max 220)-assigned Award: 3.00 points Problems? Adjust credit for all students. In the current year, Big Burgers, Inc., expanded its fast-food operations by opening several new stores in Texas. The company incurred the following costs in the current year: market appraisal ($50,000), consulting fees ($72,000), advertising ($47,000), and traveling to train employees ($31,000). The company is willing to incur these costs because it foresees strong customer demand in Texas for the next several years. What amount should Big Burgers report as an expense in its income statement associated with these costs? Total start-up expense $ 200,000 Explanation: Start-up costs: Market appraisal Consulting fees Advertising Traveling to train employees Total start-up expense $ 50,000 72,000 47,000 31,000 $200,000 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 38. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Acquisition of equipment Testing and modification of the prototype Legal and other fees for patent application on the new communication system Legal fees for successful defense of the new patent $ 2,000,000 680,000 300,000 60,000 200,000 40,000 20,000 $ 3,300,000 Total The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $10,000. During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Required: Prepare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction 1 1 General Journal Research and development expense Debit 3,180,000 Patent 2 2 3,180,000 Equipment 60,000 Patent 3 3 Credit 60,000 Research and development expense 10,000 Accumulated depreciation - equipment 10,000 Explanation: Research and development expenditures: Basic research to develop the technology Engineering design work Development of a prototype Testing and modification of the prototype Total $ 2,000,000 680,000 300,000 200,000 $ 3,180,000 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/2 10/29/2020 Ch 10 Homework (max 220)-assigned https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 2/2 10/29/2020 39. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. Early in 2021, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2021 at a cost of $6 million. Of this amount, $4 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $10 million. During 2022, revenue of $3 million was recognized. Required: Prepare a journal entry to record the 2021 development costs. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollar not in millions.) No Transaction 1 1 General Journal Debit Research and development expense 4,000,000 Software development costs 2,000,000 Cash Credit 6,000,000 Explanation: No further explanation details are available for this problem. Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 40. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. On September 30, 2021, Athens Software began developing a software program to shield personal computers from malware and spyware. Technological feasibility was established on February 28, 2022, and the program was available for release on April 30, 2022. Development costs were incurred as follows: September 30 through December 31, 2021 January 1 through February 28, 2022 March 1 through April 30, 2022 $ 2,200,000 800,000 400,000 Athens expects a useful life of four years for the software and total revenues of $5,000,000 during that time. During 2022, revenue of $1,000,000 was recognized. Required: Prepare a journal entry in each year to record development costs for 2021 and 2022. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date 1 2021 General Journal Research and development expense Debit Cash 2 2022 Credit 2,200,000 2,200,000 Research and development expense 800,000 Software development costs 400,000 Cash 1,200,000 Explanation: No further explanation details are available for this problem. Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 10/29/2020 41. Ch 10 Homework (max 220)-assigned Award: 5.00 points Problems? Adjust credit for all students. Freitas Corporation was organized early in 2021. The following expenditures were made during the first few months of the year: Attorneys’ fees in connection with the organization of the corporation State filing fees and other incorporation costs Purchase of a patent Legal and other fees for transfer of the patent Purchase of equipment Preopening salaries and employee training $ 12,000 3,000 20,000 2,000 30,000 40,000 107,000 Total Required: Prepare a summary journal entry to record the $107,000 in cash expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction 1 1 General Journal Debit Organization cost expense 15,000 Start-up expenses 40,000 Patent 22,000 Equipment 30,000 Cash Credit 107,000 Explanation: Organization cost expense ($12,000 + $3,000) = $15,000 Patent ($20,000 + $2,000) = $22,000 Hints Hint #1 https://connect.mheducation.com/connect/eztassignment/previewAssignment.htm?assignmentId=257644492&moduleId=4294882854 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 01 Which of the following statements accurately... Question 1 (of 67) MC Qu. 01 Which of the following statements accurately... Which of the following statements accurately describes depreciation? I. Depreciation is the process of allocating the cost of the asset over periods benefited. II. Depreciation is used to track the fair value of the asset. III. The book value of an asset is its original cost less accumulated depreciation.  I and II.  I and III.  II and III.  All of the other choices are correct. The process of allocating the cost of plant and equipment over the periods they are used to produce revenues is known as depreciation. References Multiple Choice save & exit MC Qu. 01 Which of the following statements accurately... Learning Objective: 11-01 Explain the concept of cost allocation as it pertains to property, plant, and equipment and intangible assets. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 02 Which of the following statements accurately... Question 2 (of 67) MC Qu. 02 Which of the following statements accurately... Which of the following statements accurately describes depreciable base (or allocation base)?  The original cost of an asset.  The original cost of an asset minus its estimated amount of depreciation over its service life.   The original cost of an asset minus its estimated residual value at the end of its service life. The estimated amount the company expects to receive for an asset at the end of its service life. The depreciable base (or allocation base) is the amount of cost to be allocated over an asset’s service life. The amount is the difference between asset’s capitalized cost at the date placed in service and the asset’s estimated residual value. Residual value is the amount the company expects receive for the asset at the end of its service life. References Multiple Choice save & exit MC Qu. 02 Which of the following statements accurately... Learning Objective: 11-01 Explain the concept of cost allocation as it pertains to property, plant, and equipment and intangible assets. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 03 The method that does not necessarily... Question 3 (of 67) MC Qu. 03 The method that does not necessarily... The method that does not necessarily produce a declining or constant pattern of depreciation over an asset's service life is:  The double-declining-balance method.  The straight-line method.   The units-of-production method. All of these answer choices produce a declining pattern. The units-of-production depreciation method is based on actual usage of the asset, which may or may not have a declining or constant pattern. References Multiple Choice save & exit MC Qu. 03 The method that does not necessarily... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 04 A delivery van that cost $40,000... Question 4 (of 67) MC Qu. 04 A delivery van that cost $40,000... A delivery van that cost $40,000 has an expected service life of eight years and a residual value of $4,000. Depreciation expense for the second year of the asset's life using the straight-line method is:  $4,500  $7,000  $8,000  All of these answer choices are incorrect. $4,500 = ($40,000 − $4,000) / 8 References Multiple Choice save & exit MC Qu. 04 A delivery van that cost $40,000... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 05 A delivery van that cost... Question 5 (of 67) MC Qu. 05 A delivery van that cost... A delivery van that cost $40,000 has an expected service life of eight years and a residual value of $4,000. Depreciation expense for the second year of the asset's life using the double-declining-balance method is:  $7,500  $6,750  $4,500  All of these answer choices are incorrect. $7,500 = [$40,000 − (2/8 × $40,000)] × 2/8 References Multiple Choice save & exit MC Qu. 05 A delivery van that cost... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 06 A delivery van that cost... Question 6 (of 67) MC Qu. 06 A delivery van that cost... A delivery van that cost $40,000 has an expected service life of 180,000 miles and a residual value of $4,000. The van was driven 24,000 miles the first year and 36,000 miles in the second year. Accumulated depreciation by the end of the second year of the asset's life using the units-ofproduction method is:   $4,800 $12,000  $7,200  All of these answer choices are incorrect. Depreciation per mile = ($40,000 − $4,000) / 180,000 miles = $0.20/mile. Accumulated depreciation = (24,000 + 36,000) × $0.20 = $12,000. References Multiple Choice save & exit MC Qu. 06 A delivery van that cost... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 07 Which of the following statements related to... Question 7 (of 67) MC Qu. 07 Which of the following statements related to... Which of the following statements related to depreciation is true?  The residual value of an asset depends on the depreciation method chosen.  If a company uses double-declining-balance method for tax purposes, the company must also use this method for financial reporting purposes.  Over the life of an asset, total reported profits will be greater under the straight-line method than under the double-declining-balance method.  Conceptually, activity-based depreciation provides a better matching of the asset’s cost to the use of that asset to help produce revenues. References Multiple Choice save & exit MC Qu. 07 Which of the following statements related to... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 08 A machine is purchased on September... Question 8 (of 67) MC Qu. 08 A machine is purchased on September... A machine is purchased on September 30, 20X1, for $60,000. Useful life is estimated at four years and no residual value is anticipated. The straig line depreciation method is used. The company's fiscal year ends on December 31. Depreciation expense for 20X1 should be:  $6,000  $30,000  $11,250  $3,750 $3,750 = [1/4 × ($60,000/4)] References Multiple Choice save & exit MC Qu. 08 A machine is purchased on September... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 09 A machine is purchased on September... Question 9 (of 67) MC Qu. 09 A machine is purchased on September... A machine is purchased on September 30, 20X1, for $60,000. Useful life is estimated at four years and no residual value is anticipated. The double-declining-balance depreciation method is used. Depreciation expense for 20X2 should be:  $15,000  $30,000  $26,250  All of the other answer choices are incorrect. 20X1 depreciation: $60,000 × 2/4 × 3/12 = 20X2 depreciation: $60,000 × 2/4 × 9/12 = + ($60,000 – 30,000) × 50% × 3/12 = $ 7,500 $22,500 3,750 $26,250 References Multiple Choice save & exit MC Qu. 09 A machine is purchased on September... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 10 When a company reports a loss on the sale... Question 10 (of 67) MC Qu. 10 When a company reports a loss on the sale... When a company reports a loss on the sale of a depreciable asset, which of the following is always true?  The company sold the asset for less than accumulated depreciation.  The company sold the asset for less than fair value.   The company sold the asset for less than book value. The company sold the asset before the useful life was over. The gain or loss on the sale of an asset is equal to consideration received minus the book value of the asset sold. When that book value is less th the consideration received, a loss is recorded. References Multiple Choice save & exit MC Qu. 10 When a company reports a loss on the sale... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 11 On January 1, 20X1, a company purchased... Question 11 (of 67) MC Qu. 11 On January 1, 20X1, a company purchased... On January 1, 20X1, a company purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a usefu of eight years and an estimated residual value of $8,000. On December 31, 20X3, the company sold the truck for $30,000. What amount of gain loss should the company record on December 31, 20X3?  Gain $22,000  Loss $18,000  Gain $5,000  Loss $3,000 ($48,000 − $8,000) / 8 = depreciation of $5,000 per year. After three years, the book value would be [$48,000 − ($5,000 × 3 years)] = $33,000. T truck was sold for $30,000, so the company should record a loss of $3,000. References Multiple Choice save & exit MC Qu. 11 On January 1, 20X1, a company purchased... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually MC Qu. 12 The Cromwell Company sold equipment for... Question 12 (of 67) MC Qu. 12 The Cromwell Company sold equipment for... The Cromwell Company sold equipment for $35,000. The equipment, which originally cost $120,000 and had an estimated useful life of 10 years $20,000 residual value, was depreciated for four years using the straight-line method. Cromwell should report the following on its income statem in the year of sale:  A $45,000 loss.  A $45,000 gain.  A $25,000 gain.  All of these answer choices are incorrect. Book value at disposal date: $80,000 [$120,000 − (4 × ($120,000 − $20,000) /10)]. Asset sold for $35,000. $35,000 − 80,000 = $45,000 loss. References Multiple Choice save & exit MC Qu. 12 The Cromwell Company sold equipment for... Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 1/1 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions Question 13 (of 67) organize assignment view: list individually Exercise 11-1 (Static) Part 1 https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment 1/3 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Exercise 11-1 (Static) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2021, the Excel Delivery Company purchased a delivery van for $33,000. At the end of its five-year service life, it is estimated tha van will be worth $3,000. During the five-year period, the company expects to drive the van 100,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. References Section Break Exercise 11-1 (Static) Depreciation methods [LO11-2] Exercise 11-1 (Static) Part 1 1. Straight line. Straight-line $ 6,000 per year Explanation: 1. Straight-line: $33,000 − 3,000 5 years = $6,000 per year Hints Hint #1 References save & exit Worksheet Difficulty: 2 Medium Exercise 11-1 (Static) Part 1 Learning Objective: 11-02 Determine periodic depreciation using both timebased and activity-based methods and account for dispositions. delete assignment https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment continue 2/3 11/7/2020 © 2020 McGraw-Hill Education. All rights reserved. McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 3/3 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually Exercise 11-1 (Static) Part 2 Question 14 (of 67) Exercise 11-1 (Static) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2021, the Excel Delivery Company purchased a delivery van for $33,000. At the end of its five-year service life, it is estimated tha van will be worth $3,000. During the five-year period, the company expects to drive the van 100,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. References Section Break Exercise 11-1 (Static) Depreciation methods [LO11-2] Exercise 11-1 (Static) Part 2 2. Double-declining balance. (Round your answers to the nearest whole dollar amount.) Year Depreciation 2021 $ 13,200 2022 7,920 2023 4,752 2024 2,851 2025 1,277 Total F $ 30,000 Explanation: 2. Double-declining balance: Straight-line rate of 20% (1 ÷ 5 years) × 2 = 40% DDB rate. Book Value Beginning Depreciation Rate per Book Value https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment 1/2 11/7/2020 Year 2021 2022 2023 2024 2025 Beginning of Year $33,000 19,800 11,880 7,128 4,277 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions × Total Rate per Year 40% 40% 40% 40% * = Depreciation $13,200 7,920 4,752 2,851 1,277* $30,000 Book Value End of Year $19,800 11,880 7,128 4,277 3,000 * Amount necessary to reduce book value to residual value Hints Hint #1 References save & exit Worksheet Difficulty: 2 Medium Exercise 11-1 (Static) Part 2 Learning Objective: 11-02 Determine periodic depreciation using both timebased and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 2/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions organize assignment view: list individually Exercise 11-1 (Static) Part 3 Question 15 (of 67) Exercise 11-1 (Static) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2021, the Excel Delivery Company purchased a delivery van for $33,000. At the end of its five-year service life, it is estimated tha van will be worth $3,000. During the five-year period, the company expects to drive the van 100,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. References Section Break Exercise 11-1 (Static) Depreciation methods [LO11-2] Exercise 11-1 (Static) Part 3 3. Units of production using miles driven as a measure of output, and the following actual mileage: (Do not round intermediate calculations Year Miles Depreciation 2021 22,000 2022 24,000 7,200 2023 15,000 4,500 2024 20,000 6,000 2025 21,000 Total $ 6,600 5,700 F $ 30,000 Explanation: 3. Units-of-production: $33,000 – 3,000 100,000 miles Actual = $0.30 per mile depreciation rate Depreciation https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment 1/2 11/7/2020 Year 2021 2022 2023 2024 2025 Totals Actual Miles Driven 22,000 24,000 15,000 20,000 21,000 102,000 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions × Depreciation Rate per Mile $0.30 0.30 0.30 0.30 * = Book Value End of Year $26,400 19,200 14,700 8,700 3,000 Depreciation $ 6,600 7,200 4,500 6,000 5,700* $30,000 * Amount necessary to reduce book value to residual value Hints Hint #1 References save & exit Worksheet Difficulty: 2 Medium Exercise 11-1 (Static) Part 3 Learning Objective: 11-02 Determine periodic depreciation using both timebased and activity-based methods and account for dispositions. delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 2/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Exercise 11-2 (Static) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. References Section Break Exercise 11-2 (Static) Depreciation methods [LO11-2] Exercise 11-2 (Static) Part 1 1. Straight-line. Straight-Line Depreciation Choose Numerator: Formula Amounts Cost minus residual $ / / 110,000 Choose Denominator: Estimated Useful Life (years) / Annual Depreciation Expense = 10 = Depreciation Expense = F $ 11,000 Depreciation Expense 2021 $ 11,000 2022 $ 11,000 rev: 01_21_2020_QC_CS-195439 Explanation: 1. Straight-line: $115,000 − 5,000 10 years = $11,000 per year References save & exit Worksheet Difficulty: 2 Medium Exercise 11-2 (Static) Part 1 Learning Objective: 11-02 Determine periodic depreciation using both timebased and activity-based delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 2/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Exercise 11-2 (Static) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. References Section Break Exercise 11-2 (Static) Depreciation methods [LO11-2] Exercise 11-2 (Static) Part 2 2. Double-declining-balance. Double-Declining-Balance Method Formula Choose Numerator: × Choose Denominator: = Depreciation Expense Beginning Book Value × Double the Straight-line Rate = Depreciation Expense Amount for 2021 $ 115,000 × 20 % = $ 23,000 Amount for 2022 $ 92,000 × 20 % = $ 18,400 rev: 01_21_2020_QC_CS-195439 Explanation: 2. Double-declining balance: Straight-line rate is 10% (1 ÷ 10 years) × 2 = 20% DDB rate 2021 $115,000 2022 ($115,000 − $23,000) × 20% = $23,000 × 20% = $18,400 References save & exit Worksheet Difficulty: 2 Medium Exercise 11-2 (Static) Part 2 Learning Objective: 11-02 Determine periodic depreciation using both timebased and activity-based methods and account for delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 2/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions Question 18 (of 67) organize assignment view: list individually Exercise 11-2 (Static) Part 3 https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment 1/3 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Exercise 11-2 (Static) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. References Section Break Exercise 11-2 (Static) Depreciation methods [LO11-2] Exercise 11-2 (Static) Part 3 3. Units of production (units produced in 2021, 30,000; units produced in 2022, 25,000). (Round "Depreciation per unit rate" answers to 2 decimal places.) Select formula for Units of Production Depreciation: (Cost - Residual) / Total units of production Calculate 2021 depreciation expense: Depreciation per unit rate $ Units produced in 2021 0.50 30,000 Depreciation in 2021 $ 15,000 Calculate 2022 depreciation expense: Depreciation per unit rate $ Units produced in 2022 0.50 25,000 $ Depreciation in 2022 12,500 rev: 01_21_2020_QC_CS-195439 Explanation: 3. Units-of-production: $115,000 − $5,000 220,000 units 2021 2022 30,000 units 25,000 units = $0.50 per unit depreciation rate × × $0.50 $0.50 = = $15,000 $12,500 References save & exit Worksheet Difficulty: 2 Medium Exercise 11-2 (Static) Part 3 Learning Objective: 11-02 Determine periodic delete assignment https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment continue 2/3 11/7/2020 © 2020 McGraw-Hill Education. All rights reserved. McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 3/3 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Exercise 11-3 (Static) Depreciation methods; partial periods [LO11-2] [The following information applies to the questions displayed below.] On October 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. References Section Break Exercise 11-3 (Static) Depreciation methods; partial periods [LO11-2] Exercise 11-3 (Static) Part 1 1. Straight-line. Straight-Line Depreciation Choose Numerator: Formula / Cost minus Residual Amounts $ Year / 110,000 Annual Depreciation Choose Denominator: = Estimated Useful Life (years) / x = 10 Annual Depreciation Annual Depreciation = $ Fraction of Year 11,000 Depreciation expense 2021 $ 11,000 x 3/12 = $ 2,750 2022 $ 11,000 x 12/12 = $ 11,000 rev: 01_21_2020_QC_CS-195439 Explanation: 1. Straight-line: $115,000 − $5,000 10 years 2021 2022 $11,000 × $11,000 × = $11,000 per year 3/12 = 12/12 = $ 2,750 $11,000 Hints Hint #1 References Worksheet Difficulty: 2 Medium Exercise 11-3 (Static) Part 1 Learning Objective: 11-02 Determine periodic depreciation using both timebased and activity-based https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment 2/3 11/7/2020 save & exit McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 3/3 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / / set policies review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions view: organize assignment list individually Exercise 11-3 (Static) Part 2 Question 20 (of 67) Exercise 11-3 (Static) Depreciation methods; partial periods [LO11-2] [The following information applies to the questions displayed below.] On October 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. References Section Break Exercise 11-3 (Static) Depreciation methods; partial periods [LO11-2] Exercise 11-3 (Static) Part 2 2. Double-declining-balance. Double-Declining-Balance Method Formula Choose Numerator: × Choose Denominator: × Fraction of Year = Depreciation Expense Beginning Book Value × Double the Straight-line Rate × Fraction of Year = Depreciation Expense Amount for 2021 $ 115,000 × 20 % × 3/12 = $ 5,750 Amount for 2022 $ 109,250 × 20 % × 12/12 = $ 21,850 rev: 01_21_2020_QC_CS-195439 Explanation: 2. Double-declining balance: https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment 1/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Straight-line rate is 10% (1 ÷ 10 years) × 2 = 20% DDB rate 2021 2022 $115,000 × 20% ($115,000 − $5,750) × 20% × 3/12 = = $ 5,750 $21,850 Hints Hint #1 References save & exit Worksheet Difficulty: 2 Medium Exercise 11-3 (Static) Part 2 Learning Objective: 11-02 Determine periodic depreciation using both timebased and activity-based methods and account for delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 2/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions Question 21 (of 67) organize assignment view: list individually Exercise 11-3 (Static) Part 3 Exercise 11-3 (Static) Depreciation methods; partial periods [LO11-2] [The following information applies to the questions displayed below.] On October 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. References Section Break Exercise 11-3 (Static) Depreciation methods; partial periods [LO11-2] Exercise 11-3 (Static) Part 3 3. Units of production (units produced in 2021, 10,000; units produced in 2022, 25,000). (Round "Depreciation per unit rate" answers to 2 decimal places.) Select formula for Units of Production Depreciation: (Cost - Residual) / Total units of production Calculate 2021 depreciation expense: Depreciation per unit rate $ Units produced in 2021 Depreciation in 2021 0.50 10,000 $ 5,000 Calculate 2022 depreciation expense: Depreciation per unit rate $ Units produced in 2022 Depreciation in 2022 0.50 25,000 $ 12,500 rev: 01_21_2020_QC_CS-195439 Explanation: https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment 1/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions p 3. Units-of-production: $115,000 − $5,000 220,000 units 2021 2022 = $0.50 per unit depreciation rate 10,000 units 25,000 units × $0.50 × $0.50 = = $ 5,000 $12,500 Hints Hint #1 References save & exit Worksheet Difficulty: 2 Medium Exercise 11-3 (Static) Part 3 Learning Objective: 11-02 Determine periodic delete assignment © 2020 McGraw-Hill Education. All rights reserved. continue Blog https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment Contact Us Troubleshooting Accessibility Terms of Use Privacy Notice 2/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Yan Luo My account Help Sign out ACCOUNTING edit assignment / set policies / review & assign name your assignment: Ch 11 Homework (max 210) 67 / 67 210.00 questions assigned points Enter student instructions (optional) add questions Question 22 (of 67) organize assignment view: list individually Brief Exercise 11-2 (Static) Depreciation methods [LO11-2] https://connect.mheducation.com/connect/hmAssignmentContent.do#organize_assignment 1/2 11/7/2020 McGraw-Hill Connect | Question Bank > Edit > 2. Add Questions Brief Exercise 11-2 (Static) Depreciation methods [LO11-2] On January 1, 2021, Canseco Plumbing Fixtures purchased equipment for $30,000. Residual value at the end of an estimated four-year servi life is expected to be $2,000. The company expects the equipment to operate for 10,000 hours. The equipment operated for 2,200 and 3,000 hours in 2021 and 2022, respectively. Required: a. Calculate depreciation expense for 2021 and 2022 using straight-line method. b. Calculate depreciation expense for 2021 and 2022 using double-declining-balance method. c. Calculate depreciation expense for 2021 and 2022 using units-of-production using hours operated. Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate depreciation expense for 2021 and 2022 using straight-line method. Straight-Line Depreciation Choose Numerator: Formula Amounts Cost minus Residual $ / Choose Denominator: / Estimated Useful Life (years) 28,000 / Annual Depreciation Expense = 4 = Depreciation Expense = F $ 7,000 Depreciation Expense 2021 $ 7,000 2022 $ 7,000  Required A Required B  rev: 01_20_2020_QC_CS-195439 Explanation: a. Straight-line: $30,000 − 2,000 4 years = $7,000 per year b. Double-declining balance: Straight-line rate is 25% (1 ÷ 4 years) × 2 = 50% DDB rate 2021 $30,000 × 50% 2022 ($30,000 − $15,000) × 50% = $15,000 = $ 7,500 c. Units-of-production: $30 000 − 2 000 save & exit $ delete assignment © 2020 McGraw-Hill Education. All rights reserv...
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