ACCT 2402 Introduction to Mang..

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Description

1.

value:

1.00 points

Purity Ice Cream Company bought a new ice cream maker at the beginning of the year at a cost of $10,000. The estimated useful life was four years, and the residual value was $1,000. Assume that the estimated productive life of the machine was 9,000 hours. Actual annual usage was 3,600 hours in year 1; 2,700 hours in year 2; 1,800 hours in year 3; and 900 hours in year 4.

Required:

1.

Complete a separate depreciation schedule for each of the alternative methods.(Round your answers to the nearest dollar amount. Omit the “$” sign in your response.)

a.

Straight-line.

Year

Depreciation

Expense

Accumulated

Depreciation

Net

Book Value

At acquisition

$

1

$

$

2

3

4


b.

Units-of-production (use four decimal places for the per unit output factor).

Year

Depreciation

Expense

Accumulated

Depreciation

Net

Book Value

At acquisition

$

1

$

$

2

3

4


c.

Double-declining-balance.

Year

Depreciation

Expense

Accumulated

Depreciation

Net

Book Value

At acquisition

$

1

$

$

2

3

4


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2.

value:

1.00 points

Trotman Company had three intangible assets at the end of 2012 (end of the accounting year):

a.

Computer software and Web development technology purchased on January 1, 2011, for $70,000. The technology is expected to have a four-year useful life to the company.

b.

A patent purchased from Ian Zimmer on January 1, 2011, for a cash cost of $6,000. Zimmer had registered the patent with the U.S. Patent Office five years ago.

c.

An internally developed trademark registered with the federal government for $13,000 on November 1, 2012. Management decided the trademark has an indefinite life.

Required:

1.

Compute the acquisition cost of each intangible asset.(Omit the “$” sign in your response.)

Acquisition cost

Technology

$

Patent

Trademark


2.

Compute the amortization of each intangible at December 31, 2012. The company does not use contra-accounts. (Assume the company uses straight-line method.) (Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

Amortization

Technology

$

Patent

Trademark


3.

Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2012.(Omit the “$” sign in your response.)

Income statement for 2012:

Operating expenses:

$




Balance sheet at December 31, 2012:

(under noncurrent assets)

Intangibles:

$


$




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3.

value:

1.00 points

You are a financial analyst for Ford Motor Company and have been asked to determine the impact of alternative depreciation methods. For your analysis, you have been asked to compare methods based on a machine that cost $106,000. The estimated useful life is 13 years, and the estimated residual value is $2,000. The machine has an estimated useful life in productive output of 200,000 units. Actual output was 20,000 in year 1 and 16,000 in year 2.

Required:

1.

For years 1 and 2 only, prepare separate depreciation schedules assuming:

a.

Straight-line method.(Do not round intermediate calculations and round your final answers to the nearest dollar amount.Omit the “$” sign in your response.)

Year

Depreciation

Expense

Accumulated

Depreciation

Net

Book Value

At acquisition

$

1

$

$

2

$


b.

Units-of-production method.(Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the “$” sign in your response.)

Year

Depreciation

Expense

Accumulated

Depreciation

Net

Book Value

At acquisition

$

1

$

$

2


c.

Double-declining-balance method.(Do not round intermediate calculations and round your final answers to the nearest dollar amount.Omit the “$” sign in your response.)

Year

Depreciation

Expense

Accumulated

Depreciation

Net

Book Value

At acquisition

$

1

$

$

2


During 2012, Jensen Company disposed of three different assets. On January 1, 2012, prior to their disposal, the accounts reflected the following:

Asset

Original

Cost

Residual

Value

Estimated

Life

Accumulated

Depreciation

(straight line)

Machine A

$

21,000

$

3,000

8 years

$

13,500 (6 years)

Machine B

41,000

4,000

10 years

29,600 (8 years)

Machine C

75,000

5,000

15 years

56,000 (12 years)


The machines were disposed of in the following ways:

a.

Machine A: Sold on January 1, 2012, for $7,200 cash.

b.

Machine B: Sold on December 31, 2012, for $8,500; received cash, $2,500, and a $6,000 interest bearing (12 percent) note receivable due at the end of 12 months.

c.

Machine C: On January 1, 2012, this machine suffered irreparable damage from an accident. On January 10, 2012, a salvage company removed the machine at no cost.

4.

value:

1.00 points

Required:

1.

Give all journal entries related to the disposal of each machine in 2012.(Leave no cells blank – be certain to enter “0” wherever required. In cases where no entry is required, please select the option “No journal entry required” for your answer to grade correctly. Omit the “$” sign in your response.)

Machine A

General Journal

Debit

Credit


Machine B

General Journal

Debit

Credit


Machine C

General Journal

Debit

Credit


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5.

value:

1.00 points

2.

Explain the accounting rationale for the way that you recorded each disposal.

Machine A: Disposal of a long-lived asset with the price below net book value results in a

Machine B: Disposal of a long-lived asset with the price above net book value results in a

Machine C: Disposal of a long-lived asset due to damage results in a remaining book value.

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