《财务会计(毕晓方)》(高等教育出版社)第10章习题答案.doc

Ex. 10–1
a. No. The $859,600 represents the original cost of the equipment. Its replacement cost, which may be more or less than $859,600, is not reported in the financial statements.

b. No. The $317,500 is the accumulation of the past depreciation charges on the equipment. The recognition of depreciation expense has no relationship to the cash account or accumulation of cash funds.
Ex. 10–2

$18,000 [($312,000 – $42,000) ÷ 15]
Ex. 10–3
= $4.36 depreciation per hour

1,250 hours at $4.36 = $5,450 depreciation for July
Ex. 10–4
a. Credit to
Accumulated
Truck No. Rate per Mile Miles Operated Depreciation

1 20.0 cents 40,000 $ 8,000
2 21.0 12,000 2,100* 3 17.5 36,000 6,300
4 20.0 21,000 4,200
Total $20,600

* Mileage depreciation of $2,520 (21 cents × 12,000) is limited to $2,100, which reduces the book value of the truck to $6,600, its residual value.

b. Depreciation Expense—Trucks 20,600
Accumulated Depreciation—Trucks 20,600
Ex. 10–5
First Year Second Year
a. 8 1/3% of $84,000 = $7,000 8 1/3% of $84,000 = $7,000
b. 16 2/3% of $84,000 = $14,000 16 2/3% of $70,000* = $11,667

*$84,000 – $14,000
Ex. 10–6
a Year 1: 9/12 × [($54,000 – $10,800) ÷ 12] = $2,700
Year 2: ($54,000 – $10,800) ÷ 12 = $3,600

b. Year 1: 9/12 × 16 2/3% of $54,000 = $6,750
Year 2: 16 2/3% of ($54,000 – $6,750) = $7,875

Ex. 10–7
a.
Current Preceding
Year Year
Land and buildings $ 426,322,000 $ 418,928,000
Machinery and equipment 1,051,861,000 1,038,323,000
Total cost $1,478,183,000 $1,457,251,000
Accumulated depreciation 633,178,000 582,941,000
Book value $ 845,005,000 $ 874,310,000

A comparison of the book values of the current and preceding years indicates that they decreased. A comparison of the total cost and accumulated depreciation reveals that Interstate Bakeries purchased $20,932,000 ($1,478,183,000 – $1,457,251,000) of additional fixed assets, which was offset by the additional depreciation expense of $50,237,000 ($633,178,000 – $582,941,000) taken during the current year.

b. The book value of fixed assets should normally increase during the year. Although additional depreciation expense will reduce the book value, most companies invest in new assets in an amount that is at least equal to the depreciation expense. However, during periods of economic downturn, companies purchase fewer fixed assets, and the book value of their fixed assets may decline. This is apparently the case with Interstate Bakeries.

Ex. 10–8
Capital expenditures:

New component: 4, 6, 7
Replacement component: 1, 2, 9, 10

Revenue expenditures: 3, 5, 8

Ex. 10–9
a. Mar. 15 Removal Expense 1,500
Cash 1,500

b. Mar. 15 Depreciation Expense 6,000
Accumulated Depreciation 6,000

15 Accumulated Depreciation 18,000
Carpet 18,000

30 Carpet 45,000
Cash 45,000

c. Dec. 31 Depreciation Expense 2,250*
Accumulated Depreciation 2,250

*($45,000 ÷ 15 years) × 9/12

Ex. 10–10
a. Cost of equipment $240,000
Accumulated depreciation at December 31, 2006
(4 years at $22,500* per year) 90,000
Book value at December 31, 2006 $150,000
*($240,000 – $15,000) ÷ 10 = $22,500

b. 1. Depreciation Expense—Equipment 11,250
Accumulated Depreciation—Equipment 11,250

2. Cash 135,000
Accumulated Depreciation—Equipment 101,250
Loss on Disposal of Fixed Assets 3,750
Equipment 240,000
Ex. 10–11
a. 2003 depreciation expense: $15,000 [($96,000 – $6,000) ÷ 6]
2004 depreciation expense: $15,000
2005 depreciation expense: $15,000

b. $51,000 ($96,000 – $45,000)

c. Cash 38,000
Accumulated Depreciation—Equipment 45,000
Loss on Disposal of Fixed Assets 13,000
Equipment 96,000

d. Cash 53,000
Accumulated Depreciation—Equipment 45,000
Equipment 96,000
Gain on Disposal of Fixed Assets 2,000
Ex. 10–12
a. $205,000 ($315,000 – $110,000)
b. $303,750 [$315,000 – ($110,000 – $98,750)], or
$303,750 ($205,000 + $98,750)

Ex. 10–13
a. $205,000 ($315,000 – $110,000)
b. $315,000. The new printing press’s cost cannot exceed $315,000 on a similar exchange. The $18,500 loss on disposal ($128,500 book value – $110,000 trade-in allowance) must be recognized.
Ex. 10–14
a. Depreciation Expense—Equipment 8,000
Accumulated Depreciation—Equipment 8,000

b. Accumulated Depreciation—Equipment 152,000
Equipment 385,000
Loss on Disposal of Fixed Assets 28,000
Equipment 280,000
Cash 35,000
Notes Payable 250,000*

*$385,000 – $100,000 – $35,000
Ex. 10–15
a. $55,000. The new truck’s cost cannot exceed $55,000 in a similar exchange.

b. $54,000 ($55,000 – $1,000) or
$54,000 ($30,000 + $24,000)

Ex. 10–16
a. $80,000,000 ÷ 100,000,000 tons = $0.80 depletion per ton
15,500,000 × $0.80 = $12,400,000 depletion expense

b. Depletion Expense 12,400,000
Accumulated Depletion 12,400,000
Ex. 10–17
a. ($472,500 ÷ 15) + ($75,000 ÷ 12) = $37,750 total patent expense

b. Amortization Expense—Patents 37,750
Patents 37,750

Ex. 10–18
a. Current year: Ratio of fixed assets to long-term liabilities (debt) = $181,758,000/$14,610,000 = 12.4
Preceding year: Ratio of fixed assets to long-term liabilities (debt) = $174,659,000/$12,150,000 = 14.4

b. The ratio of fixed assets to long-term liabilities has declined from 14.4 in the preceding year to 12.4 in the current year. This indicates a decrease in the margin of safety for long-term creditors. However, the ratio of fixed assets to long-term liabilities is large enough that Intuit will be able to borrow with relative ease.