西方財(cái)務(wù)會(huì)計(jì)課后習(xí)題答案

Chapter7

PlantAssets,NaturalResources,

andIntangibles

CheckPoints

(5min.)CP7-1

1.Property,PlantandEquipment

Millions

2.Property,plantandequipment,atcost...................$26,915

Less:Accumulateddepreciation...............................(13007)

Property,Plantandequipment,bookvalue.............$13?908

Bookvalueislessthancostbecauseaccumulated

depreciationissubtractedfromcosttocomputebookvalue.

(5min)CP7-2

Therelatedcosts(realestatecommission,backpropertytax,

removalofabuilding,andsurveyfee)areincludedaspartof

thecostofthelandbecausethebuyerofthelandmustincur

thesecoststogetthelandreadyforitsintendeduse.

Afterthelandisreadyforuse,therelatedcosts(listedabove)

wouldbeexpensed.

(10min.)CP7-3

Land($150,000x.50)................................75,000

Building($150,000x.375).........................56,250

Equipment($150,000x.125)....................18,750

NotePayable.........................................150,000

Estimated

Market

ValuePercentofTotal

Land.........$80,000$80,000/$160,000=50.0%

Building....60,000$60,000/$160,000=37.5

Equipment20,000$20,000/$160,000=12.5

Total.........$160,000100.0%

456FinancialAccounting6/eSolutionsManual

(10-15min.)CP7-4

IncomeStatement

RevenuesCORRECT

ExpensesUNDERSTATED

NetincomeOVERSTATED

BalanceSheet

CurrentassetsCORRECTTotalliabilitiesCORRECT

PlantassetsOVERSTATEDOwners'equityOVERSTATED

Totalliabilities

TotalassetsOVERSTATEDandowners'equityOVERSTATED

(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]x750,000miles........................$2,100,000

Double-declining-balance($20,000,000/5yearsx2).$8,000,000

2.Bookvalue:

Double-

Straight-Units-of-Declining-

LineProductionBalance

Cost..............................$20,000,000$20,000,000$20,000,000

LessAccumulated

Depreciation........⑵800,000)⑵100,000)(8,000,000)

Bookvalue....................$17?200Q00$17?900?000$12?000,000

458FinancialAccounting6/eSolutionsManual

(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]x1,250,000miles................$3,500,000

c.Double-declining-balance:

Year1($20,000,000x2/5)=$8,000,000

Year2($20,000,000-$8,000,000)x2/5=$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)methodoffersthetax

advantageforthefirstyearofanassefsuse.The

advantageresultsfromthegreateramountofDDB

depreciation(versustheamountofdepreciationunderthe

othermethods)duringthefirstyear.Thissavescashthat

thetaxpayercaninvesttoearnareturn.

2.

DDBdepreciation.................................................$8,000,000

Straight-linedepreciation...................................(2,800,000)

Excessdepreciationtaxdeduction.....................$5,200,000

Incometaxrate..........................................................x.40

Incometaxsavingsforfirstyear.........................$2.080.000

460FinancialAccounting6/eSolutionsManual

(5-10min.)CP7-8

First-yeardepreciation(forapartialyear):

a.Straight-line(€40,000,000-€5,000,000)/5years

x9/12..................................................................€5,250,000

b.Units-of-production(€40,000,000-€5,000,000)

/5,000,000milesx500,000miles..........€3,500,000

c.Double-declining-balance(€40,000,000x2/5

x9/12)........................................................€12,000,000

UOPdepreciationproducesthehighestnetincome(lowest

depreciation).DDBdepreciationproducesthelowestnet

income(highestdepreciation).

(10min.)CP7-9

DepreciationExpense—HotDogStand.............15,000

AccumulatedDepreciation—HotDogStand..15,000

Depreciationforyears1-4:

$50,000/10years=$5,000peryear

$5,000x4years=$20,000foryears1-4

Assefsremaining

depreciable)(New)Estimated=(New)Annual

bookvalueusefulliferemainingdepreciation

q50,000-$20,00%)2years=$15,000peryear

y

$30,000

462FinancialAccounting6/eSolutionsManual

(10min.)CP7-10

Req.1

(a)Straight-linedepreciationmethod:

20X5

Jan.1Cash....................................................10,000

AcumulatedDepreciation..................16,000

LossonSaleofDeliveryTruck.........15,000

DeliveryTruck................................41,000

(b)Double-declining-balancedepreciationmethod:

20X5

Jan.1Cash....................................................10,000

AcumulatedDepreciation..................26,240

LossonSaleofDeliveryTruck.........4,760

DeliveryTrucks..............................41,000

Req.2

Thedifferencebetweentheamountsofthelossondisposal

underthestraight-linedepreciationmethodandthedouble-

declining-balancemethodresultsfromthedifferencein

depreciationamountsunderthetwodepreciationmethods.

DepreciationishigherunderDDB,sotheassefsbookvalueis

lowerunderDDB.Asaresult,therewillbeasmallerloss

underDDB.

(5-10min.)CP7-11

1.Units-of-productiondepreciationmethodisusedto

computedepletionexpense.

Billions

2.DepletionExpense[($120/12)x0.6]..............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,

ExxonMobiPsmineralsappeartobesignificantlydepleted.To

replenishoilandgasreserves,ExxonMobilmustexploreto

locatenewminerals.

464FinancialAccounting6/eSolutionsManual

(5-10min.)CP7-12

Req.1

Costofgoodwillpurchased:

PurchasepricepaidforHotChips,Inc.$8,500,000

MarketvalueofHotChips9netassets:

MarketvalueofHotChips9assets....$14,000,000

Less:HotChips9liabilities..................(11,000,000)

MarketvalueofHotChips9nefassets3,000,000

Costofgoodwill....................................$5,500,000

Req.2

PepsiCowilldeterminewhetheritsgoodwillhasincreasedor

decreasedinvalue.Ifthegoodwill'svaluehasincreased,

thereisnothingtorecord.ButifgoodwilHsvaluehas

decreased,PepsiCowillrecordalossandwritedownthe

bookvalueofthegoodwill.

(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.Thecompany

earnedaprofitinitsfirstyear.Hopefully,futureyears5profits

willbeevenhigher.

466FinancialAccounting6/eSolutionsManual

(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

468FinancialAccounting6/eSolutionsManual

(10-15min.)E7-2

Allocationofcosttoindividualmachines:

Costof

AppraisedPercentageofTotalTotalEach

MachineValueMarketValueCostAsset

1$27,000$27,000/$108,000=.250$90,000x,25=$22,500

245,00045,000/108,000=.41790,000x.417=37,530

336,00036,000/108,000=.33390,000x.333=29,970

Totals$108,0001.000$90.000

Salepriceofmachineno.2...................$45,000

Cost.........................................................37,530

Gainonsaleofmachine........................$7.470

(5-10min.)E7-3

Capitalexpenditures:

(a)Purchaseprice,(b)salestax,(c)transportationand

insurance,(d)installation,(e)trainingofpersonnel,

(f)reinforcementtoplatform,(h)majoroverhaul,(j)lubrication

beforemachineisplacedinservice

Immediateexpenses:

(g)Incometax,(i)ordinaryrecurringrepairs,(k)periodic

lubrication

(15min.)E7-4

Journal

ACCOUNTTITLESANDEXPLANATIONDEBITCREDIT

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)/35x3/12..........5,000

2.BALANCESHEET

Plantassets:

Land......................................................$500,000

Building.....................................................$890,000

LessAccumulateddepreciation...........(5Q00)

Building,net.............................................885,000

3.INCOMESTATEMENT

Expense:

Depreciationexpense........................$5,000

470FinancialAccounting6/eSolutionsManual

(10-15min.)E7-5

Depreciationistheprocessofallocatingaplantassefscost

toexpenseovertheperiodtheassetisused.Thisprocessis

designedtomatchdepreciationexpenseagainstrevenueover

theassefslifeinordertomeasureincome.Ofless

importanceistheneedtoaccountfortheassefsdeclinein

usefulness.

Khuwajaiscorrectthatdepreciationcanrelatetothewear

andtearofanasset.However,thedepreciationofsome

assetsismoreaffectedbyobsolescencethanbyphysical

wearandtear.

Kasiakiswrong.Depreciationhasnothingtodowithacash

fundtoreplaceanasset.

(15-20min.)E7-6

Units-of-Double-Declining-

YearStraight-LineProductionBalance

20X4$3,000$4,080$7,500

20X53,0003,3603,750

20X63,0002,160750

20X73,0002,400-0-

$12.000$12.000$12.000

Computations:

Straight-line:($15,000-$3,000))4=$3,000peryear.

Units-of-production:($15,000-$3,000))100,000miles=

$.12permile;

20X434,000X$.12二$4,080

20X528,000X.12—3,360

20X618,000X.12—2,160

20X720,000X.12—2,400

Double-declining-balance—Twicethestraight-linerate:

1/4x2=2/4=50%

20X4$15,000x,50=$7,500

20X5($15,000-$7,500)x.50=3,750

20X6$7,500-$3,750=$3,750-residualvalueof

$3,000=$750

Theunits-ofproductionmethodtracksthewearandtearon

thevanmostclosely.

Forincometaxpurposes,thedouble-declining-balance

methodisbestbecauseitprovidesthemostdepreciationand,

thus,thelargesttaxdeductionsintheearlylifeoftheasset.

Thecompanycaninvestthetaxsavingstoearnareturnon

theinvestment.

472FinancialAccounting6/eSolutionsManual

(15min.)E7-7

INCOMESTATEMENT

Expenses:

Depreciationexpense—building

[($70,000+$130,000+$60,000)-$50,000]/20....$10,500

Depreciationexpense——furnitureandfixtures

($40,000x2/5)...........................................................16,000

Suppliesexpense

($9,000-$2,000)...................................................7,000

BALANCESHEET

Currentassets:

Supplies....................................................................$2,000

Plantassets:

Building($70,000+$130,000+$60,000)..$260,000

LessAccumulateddepreciation..............(10,500)$249,500

Furnitureandfixtures..................................$40,000

LessAccumulateddepreciation..............(16,000)24,000

STATEMENTOFCASHFLOWS

Cashflowsfrominvestingactivities:

Purchaseofbuildings($70,000+$60,000)...........$(130,000)

Purchaseoffurnitureandfixtures.........................(40,000)

(10-15min.)E7-8

LetN=Numberofhoursofusage

Units-of-productionCost-ResidualvalueNumberof

depreciation一Usefullife,inhoursxhoursofuse

$102,000-$10,000

$3,680XN

-50,000

$3,680=$1.84xN

$3,680

N

一$1.84

N=2,000hours

Alternatesolutionsetup:

DepreciationCost-Residualvalue

perhour-Usefullife,inhours

$102,000-$10,000

$1.84

-50,000一

UOPDepreciationNumberof

Depreciation—perhourxhoursofuse

$3,680=$1.84xN

_$3,680

N

一$1.84

N=2,000hours

474FinancialAccounting6/eSolutionsManual

(10-15min.)E7-9

SHORT-CUTSOLUTION:SLDDB

Depreciationbythetwomethods...........$13.500*$30,000*

ExtradepreciationprovidedbyDDB

($30,000-$13,500)..........................................$16,500

Multiplybytheincometaxrate...........................x.40

TaxsavedbyusingDDB=Extracashtoinvest.$6,600

Depreciationmethodforincometax:Double-declining-

balance

CashsavedbyusingMACRSdepreciation:

SLDDB

Cashrevenues..............................................$100,000$100,000

Cashexpenses.............................................60,00060,000

Cashprovidedbyoperationsbefore

incometax.............................................40,00040,000

Depreciationexpense(anoncashexpense):

*SL:[($210,000-$21,000)/7x6/12]......13,500

*DDB:($210,000x2/7x6/12)....................30,000

Incomebeforeincometax............................26,50010,000

Incometaxexpense(40%)...........................$10：600$4：000

Cash-flowanalysis:

Cashprovidedbyoperationsbefore

incometax........................................$40,000$40,000

—Incometaxexpense.................................(10,600)(4,000)

Cashprovidedbyoperations...................$29.400$36.000

Extracashavailableforinvestmentif

DDBisused($36,000-$29,400).........................$6,600

(10-15min.)E7-10

Journal

DATEACCOUNTTITLESANDEXPLANATIONDEBITCREDIT

Year20DepreciationExpense

[($900,000-$100,000))40]..20,000

AccumulatedDepreciation—Building.20,000

Year21DepreciationExpense.............................45,000*

AccumulatedDepreciation—Building.45,000

Computation:

Depreciablecost:$900,000-$100,000=$800,000

Depreciationthroughyear20:

$800,000)40=$20,000x20=$400,000

Assefsremainingdepreciablebookvalue:

$900,000-$400,000-$50,000=$450,000

Newestimatedusefulliferemaining:10years

Newannualdepreciation:$450,000)10=$45,000

476FinancialAccounting6/eSolutionsManual

(15-20min.)E7-11

Journal

DATEACCOUNTTITLESANDEXPLANATIONDEBITCREDIT

20X5Depreciationfor9months:

Sept.30DepreciationExpense........................1,566a

AccumulatedDepreciation一

Fixtures...........................................1,566

Saleoffixtures:

30Cash....................................................800

AccumulatedDepreciation一

StoreFixtures($3,480+$1,566)........5,046

LossonSaleofFixtures....................2,854b

Fixtures...........................................8,700

a20X4depreciation:$8,700x2/5=$3,480

20X5depreciation:($8,700-$3,480)x2/5x9/12=$1,566

bLossiscomputedasfollows:

Salepriceofoldfixtures...........................$800

Bookvalueofoldfixtures:

Cost.............................................................$8,700

Less:Accumulateddepreciation..............(5,046)3,654

Lossonsale....................................................$2.854

(10-15min.)E7-12

Costofnewtruck=Bookvalueofoldtruck+Cashpaid

$295,000$175,000a$120,000

aCostofoldtruck...................................................$285,000

LessAccumulateddepreciation:

($285,000-$35,000)x175+120+210+b

C1^00d(110,000)

Bookvalueofoldtruck........................................$175,000

bAlternatesolutionsetup:

($285,000-$35,000)=$.25permile

1,000,000miles

75,000+120,000+210,000+35,000=440,000milesdriven

Accumulateddepreciation=440,000milesx$.25

=$110,000

478FinancialAccounting6/eSolutionsManual

(10-15min.)E7-13

Journal

DATEACCOUNTTITLESANDEXPLANATIONDEBITCREDIT

(a)Purchaseofmineralrights:

MineralAsset..................................398,500

Cash............................................398,500

(b)Paymentoffeesandothercosts:

MineralAsset($500+$1,000)......1,500

Cash............................................1,500

MineralAsset...................................60,000

Cash............................................60,000

(c)DepletionExpense.........................115,000*

AccumulatedDepletion一

MineralAsset.............................115,000

*$398,500+$500+$1,000+$60,000=$460,000;

$460,000+200,000tons=$2.30perton;

50,000tonsx$2.30=$115,000

Mineralassetbookvalue=$345,000($460,000-$115,000).

(10-15min.)E7-14

Journal

DATEACCOUNTTITLESANDEXPLANATIONDEBITCREDIT

Part1(a)Purchaseofpatent:

Patents.............................400,000

Cash..............................................400,000

(b)Amortizationforeachyear:

AmortizationExpense——Patents

($400,000+5)...................................80,000

Patents.........................................80,000

Part2Amortizationforyear3:

AmortizationExpense——Patents..120,000*

Patents....................................120,000

*Assetremainingbookvalue:

$400,000-($80,000x2)=$240,000

Newestimatedusefulliferemaining:2years=5-3

Newannualamortization:$240,000+2=$120,000

480FinancialAccounting6/eSolutionsManual

(5-10min.)E7-15

Req.1

Costofgoodwillpurchased:

Millions

PurchasepricepaidforRandallsFoodStores......$25

MarketvalueofRandalls9netassets:

MarketvalueofRandalls'assets($10+$70)......$80

Less:Randalls9liabilities....................................(60)

MarketvalueofRandalls9nefassets20

Costofgoodwill.......................................................$5

Req.2

Journal

DATEACCOUNTTITLESANDEXPLANATIONDEBITCREDIT

CurrentAssets...............................................10

Long-TermAssets..........................................70

Goodwill..........................................................5

Liabilities....................................................60

Cash............................................................25

PurchasedRandallsFoodStores.

Req.3

Safewaywilldeterminewhetheritsgoodwillhasincreasedor

decreasedinvalue.Ifthegoodwiirsvaluehasincreased,

thereisnothingtorecord.Butifgoodwiirsvaluehas

decreased,Safewaywillrecordalossandwritedownthe

bookvalueofthegoodwill.

(15-20min.)E7-16

Req.1

a.$1,255millionistheamountofcashthatCampbellSoup

Companypaidtoacquire(purchase)anothercompany.

b.$1,583millionisthebookvalueofCampbellSoup's

goodwillattheendof20X3.

Req.2

CampbellSoupmusthaverecordedalossongoodwill.The

lossmusthavebeen$69million($452+$1,200-$1,583).

482FinancialAccounting6/eSolutionsManual

(10-15min.)E7-17

1.Depreciationandamortizationappearonthestatementof

cashflowsasuAdjustmentstoreconcilenetincometonet

cashprovidedbyoperatingactivities/9Depreciationand

amortizationareexpensesthatdecreasednetincome,but

theydidnotdecreasecash.Tomeasurecashflowfrom

operations,depreciationandamortizationareaddedbackto

netincome.

2.During20X3,Pier1Imports:

a.Paid$99milliontopurchasepropertyandequipment,

labelingthiscashpaymentas“Capitalexpenditures.”

b.Receivedcashof$6millionfromthedisposal(sale)of

property.

(10min.)E7-18

a.Saleofbuilding

(ordisposalofbuilding)................$650,000

b.Insuranceproceedsfromfire

(ordisposalofbuilding)................2,500,000

c.Renovationofstores

(orcapitalexpenditures)...............(150,000)

d.Purchaseofstorefixtures

(orcapitalexpenditures)...............(100,000)

484FinancialAccounting6/eSolutionsManual

(15-20min.)E7-19

Amountsinmillions

PropertyandEquipment________

Beg.bal.13,824Costofprop.

Purchases2,528andequip,soldX=593

End.bal.15,759|

________AccumulatedDepreciation

Accum.depr.ofprop.Beg.bal.3,925

X=524andequip,soldXDepr.exp.940

End.bal.4,341

Bookvalueofpropertyandequipmentsold:

Cost.......................................................$593

Accumulateddepreciation......................(524)

Bookvaluesold........................................69

-Lossonsale.............................................(31)

Salepriceofpropertyandequipment.….$38

(15-20min.)E7-20

Millions

Netincomeunderstraight-linedepreciation....$68.30

Differenceindepreciationfor20X4(year4of8):

Straightlinedepreciation,asreported.........$18.90

DDBdepreciationforyear4(seebelow)......15.95

Decreaseindepreciationexpense...............2.95

After-taxincometaxrate(1-.40).................x.60

Increaseinnetincome..................................1.77

NetincomeFossilcanexpectfor20X4

ifthecompanyusesDDBdepreciation....$70.07

Millions

Costofplantassets($18.90x8years).................$151.20

DDBdepreciationbyyear:

YearDDBdepreciation

1$151.20x2/8..............................................$37.80

2($151.20-$37.80)x2/8...............................28.35

3($151.20-$37.80-$28.35)x2/8................21.26

4($151.20-$37.80-$28.35-$21.26)x2/8..15.95

486FinancialAccounting6/eSolutionsManual