西方财务会计课后习题答案.docx

1、西方财务会计课后习题答案Chapter 7Plant Assets, Natural Resources, and IntangiblesCheck Points(5 min.) CP 7-11. Property, Plant and Equipment Millions2.Property, plant and equipment, at cost$26,915Less: Accumulated depreciation(13,007)Property, Plant and equipment, book value$13,908Book value is less than cost b

2、ecause accumulated depreciation is subtracted from cost to compute book value.(5 min) CP 7-2The related costs (real estate commission, back property tax, removal of a building, and survey fee) are included as part of the cost of the land because the buyer of the land must incur these costs to get th

3、e land ready for its intended use.After the land is ready for use, the related costs (listed above) would be expensed.(10 min.) CP 7-3Land ($150,000 .50).75,000Building ($150,000 .375).56,250Equipment ($150,000 .125)18,750 Note Payable150,000EstimatedMarketValuePercent of TotalLand.$ 80,000$80,000 /

4、 $160,000= 50.0%Building. 60,000$60,000 / $160,000= 37.5Equipment. 20,000$20,000 / $160,000= 12.5Total.$160,000100.0%(10-15 min.) CP 7-4Income StatementRevenuesCORRECTExpensesUNDERSTATEDNet income OVERSTATEDBalance SheetCurrent assetsCORRECTTotal liabilitiesCORRECTPlant assetsOVERSTATEDOwners equity

5、OVERSTATED Total liabilities Total assetsOVERSTATED and owners equityOVERSTATED(10 min.) CP 7-51. First-year depreciation:Straight-line ($20,000,000 $6,000,000) / 5 years.$2,800,000Units-of-production ($20,000,000 $6,000,000) / 5,000,000 miles 750,000 miles.$2,100,000Double-declining-balance ($20,00

6、0,000 / 5 years 2).$8,000,0002. Book value:Straight-LineUnits-of-ProductionDouble-Declining-BalanceCost.$20,000,000$20,000,000$20,000,000Less Accumulated Depreciation. (2,800,000) (2,100,000) (8,000,000)Book value.$17,200,000$17,900,000$12,000,000(10 min.) CP 7-6Third-year depreciation:a.Straight-li

7、ne ($20,000,000 $6,000,000) / 5 years.$2,800,000b.Units-of-production ($20,000,000 $6,000,000) / 5,000,000 miles 1,250,000 miles$3,500,000c.Double-declining-balance:Year 1 ($20,000,000 2/5) = $8,000,000Year 2 ($20,000,000 $8,000,000) 2/5 = $4,800,000Year 3 ($20,000,000 $8,000,000 $4,800,000 = $7,200

8、,000; $7,200,000 $6,000,000 residual value)$1,200,000(10 min.) CP 7-71. The double-declining-balance (DDB) method offers the tax advantage for the first year of an assets use. The advantage results from the greater amount of DDB depreciation (versus the amount of depreciation under the other methods

9、) during the first year. This saves cash that the taxpayer can invest to earn a return.2. DDB depreciation.$8,000,000Straight-line depreciation. (2,800,000)Excess depreciation tax deduction.$5,200,000Income tax rate .40Income tax savings for first year$2,080,000(5-10 min.) CP 7-8First-year depreciat

10、ion (for a partial year):a. Straight-line (40,000,000 5,000,000) / 5 years 9/12 5,250,000b. Units-of-production (40,000,000 5,000,000) / 5,000,000 miles 500,000 miles. 3,500,000c. Double-declining-balance (40,000,000 2/5 9/12).12,000,000UOP depreciation produces the highest net income (lowest deprec

11、iation). DDB depreciation produces the lowest net income (highest depreciation).(10 min.) CP 7-9Depreciation Expense Hot Dog Stand.15,000 Accumulated Depreciation Hot Dog Stand.15,000Depreciation for years 1-4: $50,000 / 10 years = $ 5,000 per year $ 5,000 4 years = $20,000 for years 1-4Assets remai

12、ningdepreciable (New) Estimated=(New) Annualbook valueuseful life remainingdepreciation$50,000 $20,000 2 years=$15,000 per year$30,000(10 min.) CP 7-10Req. 1(a) Straight-line depreciation method:20X5Jan. 1Cash10,000Acumulated Depreciation.16,000Loss on Sale of Delivery Truck.15,000 Delivery Truck.41

13、,000(b) Double-declining-balance depreciation method:20X5Jan. 1Cash10,000Acumulated Depreciation.26,240Loss on Sale of Delivery Truck.4,760 Delivery Trucks.41,000Req. 2The difference between the amounts of the loss on disposal under the straight-line depreciation method and the double-declining-bala

14、nce method results from the difference in depreciation amounts under the two depreciation methods.Depreciation is higher under DDB, so the assets book value is lower under DDB. As a result, there will be a smaller loss under DDB.(5-10 min.) CP 7-111.Units-of-production depreciation method is used to

15、 compute depletion expense.Billions2.Depletion Expense ($120 / 12) 0.6.6.0 Accumulated Depletion6.03.At December 31, 20X5:Billions Cost of mineral assets.$120.0 Less Accumulated depletion ($85.0 + $6.0). (91.0) Book value of mineral assets.$ 29.0Based on the book value ($29 billion) of oil and gas r

16、eserves, ExxonMobils minerals appear to be significantly depleted. To replenish oil and gas reserves, ExxonMobil must explore to locate new minerals.(5-10 min.) CP 7-12Req. 1Cost of goodwill purchased:Purchase price paid for Hot Chips, Inc.$8,500,000Market value of Hot Chips net assets: Market value

17、 of Hot Chips assets.$14,000,000 Less: Hot Chips liabilities. (11,000,000) Market value of Hot Chips net assets 3,000,000Cost of goodwill.$5,500,000Req. 2PepsiCo will determine whether its goodwill has increased or decreased in value. If the goodwills value has increased, there is nothing to record.

18、 But if goodwills value has decreased, PepsiCo will record a loss and write down the book value of the goodwill.(10-15 min.) CP 7-13Req. 1Ling SoftwareIncome StatementYear Ended December 31, 20X4 Revenues: Sales revenue.$1,500,000Expenses: Cost of goods sold.$200,000 Research and development expense

19、.500,000 Amortization of patent ($300,000 / 3).100,000 Selling expenses 400,000 Total expenses. 1,200,000Net income.$ 300,000Req. 2Lings outlook for future profits is favorable. The company earned a profit in its first year. Hopefully, future years profits will be even higher.(5 min.) CP 7-14Troy Sa

20、tellite SystemsStatement of Cash FlowsYear Ended December 31, 20X5Cash flows from investing activities:Millions Purchase of other companies$(160.0) Capital expenditures.(45.0) Proceeds from sale of cable operations. 123.0 Net cash provided (used) by investing activities.$ (82.0)Exercises(5-10 min.)

21、E 7-1Land: $200,000 + $150,000 + $2,000 + $2,500 + $5,500 = $360,000Land improvements: $93,000 + $10,400 + $6,000 = $109,400Building: $80,000 + $1,200,000 = $1,280,000(10-15 min.) E 7-2Allocation of cost to individual machines:MachineAppraisedValuePercentage of TotalMarket ValueTotalCostCost ofEach

22、Asset1$ 27,000$27,000 / $108,000=.250$90,000 .25=$22,5002 45,000 45,000 / 108,000=.417 90,000 .417=37,5303 36,000 36,000 / 108,000= .333 90,000 .333= 29,970Totals$108,0001.000$90,000Sale price of machine no. 2.$45,000Cost. 37,530Gain on sale of machine$ 7,470(5-10 min.) E 7-3Capital expenditures: (a

23、) Purchase price, (b) sales tax, (c) transportation and insurance, (d) installation, (e) training of personnel, (f) reinforcement to platform, (h) major overhaul, (j) lubrication before machine is placed in serviceImmediate expenses: (g) Income tax, (i) ordinary recurring repairs, (k) periodic lubri

24、cation(15 min.) E 7-4JournalACCOUNT TITLES AND EXPLANATIONDEBITCREDIT1.a.Land500,000 Cash.500,000b.Building($1,000 + $20,000 + $830,000 + $39,000).890,000 Note Payable830,000 Cash ($1,000 + $20,000 + $39,000).60,000c.Depreciation Expense5,000 Accumulated Depreciation ($890,000 $190,000) / 35 3/125,0

25、002.BALANCE SHEETPlant assets: Land.$500,000 Building.$890,000 Less Accumulated depreciation. (5,000) Building, net.885,0003.INCOME STATEMENTExpense: Depreciation expense.$ 5,000(10-15 min.) E 7-5Depreciation is the process of allocating a plant assets cost to expense over the period the asset is us

26、ed. This process is designed to match depreciation expense against revenue over the assets life in order to measure income. Of less importance is the need to account for the assets decline in usefulness. Khuwaja is correct that depreciation can relate to the wear and tear of an asset. However, the depreciation of some assets is more affected by obsolescen