西方财务会计课后习题答案.docx
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西方财务会计课后习题答案
Chapter7
PlantAssets,NaturalResources,
andIntangibles
CheckPoints
（5min.）CP7-1
1.Property,PlantandEquipment
Millions
2.
Property,plantandequipment,atcost………………
$26,915
Less:
Accumulateddepreciation………………………
（13,007）
Property,Plantandequipment,bookvalue…………
$13,908
Bookvalueislessthancostbecauseaccumulateddepreciationissubtractedfromcosttocomputebookvalue.
（5min）CP7-2
Therelatedcosts（realestatecommission,backpropertytax,removalofabuilding,andsurveyfee）areincludedaspartofthecostofthelandbecausethebuyerofthelandmustincurthesecoststogetthelandreadyforitsintendeduse.
Afterthelandisreadyforuse,therelatedcosts（listedabove）wouldbeexpensed.
（10min.）CP7-3
Land（$150,000.50）……………………….
75,000
Building（$150,000.375）………………….
56,250
Equipment（$150,000.125）………………
18,750
NotePayable………………………………
150,000
Estimated
Market
Value
PercentofTotal
Land………………….
$80,000
$80,000/$160,000
=
50.0%
Building……………..
60,000
$60,000/$160,000
=
37.5
Equipment…………..
20,000
$20,000/$160,000
=
12.5
Total……………….…
$160,000
100.0%
（10-15min.）CP7-4
IncomeStatement
Revenues
CORRECT
Expenses
UNDERSTATED
Netincome
OVERSTATED
BalanceSheet
Currentassets
CORRECT
Totalliabilities
CORRECT
Plantassets
OVERSTATED
Owners’equity
OVERSTATED
Totalliabilities
Totalassets
OVERSTATED
andowners’equity
OVERSTATED
（10min.）CP7-5
1.First-yeardepreciation:
Straight-line（$20,000,000–$6,000,000）/5years...
$2,800,000
Units-of-production[（$20,000,000–$6,000,000）/
5,000,000miles]750,000miles………………….
$2,100,000
Double-declining-balance（$20,000,000/5years2）.
$8,000,000
2.Bookvalue:
Straight-
Line
Units-of-
Production
Double-
Declining-
Balance
Cost…………………….
$20,000,000
$20,000,000
$20,000,000
LessAccumulated
Depreciation………..
（2,800,000）
（2,100,000）
（8,000,000）
Bookvalue…………….
$17,200,000
$17,900,000
$12,000,000
（10min.）CP7-6
Third-yeardepreciation:
a.
Straight-line（$20,000,000–$6,000,000）/5years…..
$2,800,000
b.
Units-of-production[（$20,000,000–$6,000,000）/
5,000,000miles]1,250,000miles…………………
$3,500,000
c.
Double-declining-balance:
Year1（$20,000,0002/5）=$8,000,000
Year2（$20,000,000–$8,000,000）2/5=$4,800,000
Year3（$20,000,000–$8,000,000–$4,800,000=$7,200,000;
$7,200,000–$6,000,000residualvalue）……
$1,200,000
（10min.）CP7-7
1.Thedouble-declining-balance（DDB）methodoffersthetaxadvantageforthefirstyearofanasset’suse.TheadvantageresultsfromthegreateramountofDDBdepreciation（versustheamountofdepreciationundertheothermethods）duringthefirstyear.Thissavescashthatthetaxpayercaninvesttoearnareturn.
2.
DDBdepreciation…………………………………..
$8,000,000
Straight-linedepreciation………………………….
（2,800,000）
Excessdepreciationtaxdeduction……………...
$5,200,000
Incometaxrate………………………………………
.40
Incometaxsavingsforfirstyear…………………
$2,080,000
（5-10min.）CP7-8
First-yeardepreciation（forapartialyear）:
a.Straight-line（€40,000,000–€5,000,000）/5years
9/12………………………………………………
€5,250,000
b.Units-of-production（€40,000,000–€5,000,000）
/5,000,000miles500,000miles…………….
€3,500,000
c.Double-declining-balance（€40,000,0002/5
9/12）….………………………………………….
€12,000,000
UOPdepreciationproducesthehighestnetincome（lowestdepreciation）.DDBdepreciationproducesthelowestnetincome（highestdepreciation）.
（10min.）CP7-9
DepreciationExpense—HotDogStand………...
15,000
AccumulatedDepreciation—HotDogStand..
15,000
Depreciationforyears1-4:
$50,000/10years=$5,000peryear
$5,0004years=$20,000foryears1-4
Asset’sremaining
depreciable
（New）Estimated
=
（New）Annual
bookvalue
usefulliferemaining
depreciation
$50,000–$20,000
2years
=
$15,000peryear
$30,000
（10min.）CP7-10
Req.1
（a）Straight-linedepreciationmethod:
20X5
Jan.1
Cash………………………………………
10,000
AcumulatedDepreciation…………….
16,000
LossonSaleofDeliveryTruck……...
15,000
DeliveryTruck……………………….
41,000
（b）Double-declining-balancedepreciationmethod:
20X5
Jan.1
Cash………………………………………
10,000
AcumulatedDepreciation…………….
26,240
LossonSaleofDeliveryTruck……...
4,760
DeliveryTrucks……………………...
41,000
Req.2
Thedifferencebetweentheamountsofthelossondisposalunderthestraight-linedepreciationmethodandthedouble-declining-balancemethodresultsfromthedifferenceindepreciationamountsunderthetwodepreciationmethods.
DepreciationishigherunderDDB,sotheasset’sbookvalueislowerunderDDB.Asaresult,therewillbeasmallerlossunderDDB.
（5-10min.）CP7-11
1.
Units-of-productiondepreciationmethodisusedtocomputedepletionexpense.
Billions
2.
DepletionExpense[（$120/12）0.6]………….
6.0
AccumulatedDepletion………………………
6.0
3.
AtDecember31,20X5:
Billions
Costofmineralassets………………………..
$120.0
LessAccumulateddepletion（$85.0+$6.0）.
（91.0）
Bookvalueofmineralassets………………..
$29.0
Basedonthebookvalue（$29billion）ofoilandgasreserves,ExxonMobil’smineralsappeartobesignificantlydepleted.Toreplenishoilandgasreserves,ExxonMobilmustexploretolocatenewminerals.
（5-10min.）CP7-12
Req.1
Costofgoodwillpurchased:
PurchasepricepaidforHotChips,Inc.
$8,500,000
MarketvalueofHotChips’netassets:
MarketvalueofHotChips’assets….
$14,000,000
Less:
HotChips’liabilities…………...
（11,000,000）
MarketvalueofHotChips’netassets
3,000,000
Costofgoodwill…………………………..
$5,500,000
Req.2
PepsiCowilldeterminewhetheritsgoodwillhasincreasedordecreasedinvalue.Ifthegoodwill’svaluehasincreased,thereisnothingtorecord.Butifgoodwill’svaluehasdecreased,PepsiCowillrecordalossandwritedownthebookvalueofthegoodwill.
（10-15min.）CP7-13
Req.1
LingSoftware
IncomeStatement
YearEndedDecember31,20X4
Revenues:
Salesrevenue…………………………….
$1,500,000
Expenses:
Costofgoodssold……………………...
$200,000
Researchanddevelopmentexpense..
500,000
Amortizationofpatent（$300,000/3）...
100,000
Sellingexpenses…………………………
400,000
Totalexpenses…………………………...
1,200,000
Netincome…………………………………...
$300,000
Req.2
Ling’soutlookforfutureprofitsisfavorable.Thecompanyearnedaprofitinitsfirstyear.Hopefully,futureyears’profitswillbeevenhigher.
（5min.）CP7-14
TroySatelliteSystems
StatementofCashFlows
YearEndedDecember31,20X5
Cashflowsfrominvestingactivities:
Millions
Purchaseofothercompanies…………………………
$（160.0）
Capitalexpenditures……………………………….…...
（45.0）
Proceedsfromsaleofcableoperations…………….
123.0
Netcashprovided（used）byinvestingactivities.
$（82.0）
Exercises
（5-10min.）E7-1
Land:
$200,000+$150,000+$2,000+$2,500+$5,500=
$360,000
Landimprovements:
$93,000+$10,400+$6,000=$109,400
Building:
$80,000+$1,200,000=$1,280,000
（10-15min.）E7-2
Allocationofcosttoindividualmachines:
Machine
Appraised
Value
PercentageofTotal
MarketValue
Total
Cost
Costof
EachAsset
1
$27,000
$27,000/$108,000
=
.250
$90,000.25
=
$22,500
2
45,000
45,000/108,000
=
.417
90,000.417
=
37,530
3
36,000
36,000/108,000
=
.333
90,000.333
=
29,970
Totals
$108,000
1.000
$90,000
Salepriceofmachineno.2……………..
$45,000
Cost………………………………………….
37,530
Gainonsaleofmachine…………………
$7,470
（5-10min.）E7-3
Capitalexpenditures:
（a）Purchaseprice,（b）salestax,（c）transportationandinsurance,（d）installation,（e）trainingofpersonnel,
（f）reinforcementtoplatform,（h）majoroverhaul,（j）lubricationbeforemachineisplacedinservice
Immediateexpenses:
（g）Incometax,（i）ordinaryrecurringrepairs,（k）periodiclubrication
（15min.）E7-4
Journal
ACCOUNTTITLESANDEXPLANATION
DEBIT
CREDIT
1.
a.
Land……………………………………………
500,000
Cash………………………………………...
500,000
b.
Building
（$1,000+$20,000+$830,000+$39,000）...
890,000
NotePayable………………………………
830,000
Cash（$1,000+$20,000+$39,000）…….
60,000
c.
DepreciationExpense………………………
5,000
AccumulatedDepreciation
（$890,000–$190,000）/353/12………
5,000
2.
BALANCESHEET
Plantassets:
Land………………………………………...
$500,000
Building…………………………………….
$890,000
LessAccumulateddepreciation……….
（5,000）
Building,net……………………………….
885,000
3.
INCOMESTATEMENT
Expense:
Depreciationexpense…………………...
$5,000
（10-15min.）E7-5
Depreciationistheprocessofallocatingaplantasset’scosttoexpenseovertheperiodtheassetisused.Thisprocessisdesignedtomatchdepreciationexpenseagainstrevenueovertheasset’slifeinordertomeasureincome.Oflessimportanceistheneedtoaccountfortheasset’sdeclineinusefulness.
Khuwajaiscorrectthatdepreciationcanrelatetothewearandtearofanasset.However,thedepreciationofsomeassetsismoreaffectedbyobsolescen
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