Chapter%2011_Solution%20to%20Brief%20Exercises%20and%20selected%20questions0

Chapter 11_Solutio - SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 11-1 2010($50,000 $2,000 X 23,000 160,000($50,000 $2,000 X 31,000 160,000 = $6,900

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SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 11-1 2010: ($50,000 – $2,000) X 23,000 = $6,900 160,000 2011: ($50,000 – $2,000) X 31,000 = $9,300 160,000 BRIEF EXERCISE 11-2 (a) $80,000 – $8,000 = $9,000 8 (b) $80,000 – $8,000 X 4/12 = $3,000 8 BRIEF EXERCISE 11-3 (a) ($80,000 – $8,000) X 8/36* = $16,000 (b) [($80,000 – $8,000) X 8/36] X 9/12 = $12,000 *[8(8 + 1)] ÷ 2 BRIEF EXERCISE 11-4 (a) $80,000 X 25%* = $20,000 (b) ($80,000 X 25%) X 3/12 = $5,000
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*(1/8 X 2)
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BRIEF EXERCISE 11-5 Depreciable Base = ($28,000 + $200 + $125 + $500 + $475) – $3,000 = $26,300. BRIEF EXERCISE 11-6 Asset Depreciation Expense A ($70,000 – $7,000)/10 = $ 6,300 B ($50,000 – $5,000)/5 = 9,000 C ($82,000 – $4,000)/12 = 6,500 $21,800 Composite rate = $21,800/$202,000 = 10.8% Composite life = $186,000*/$21,800 = 8.5 years *($63,000 + $45,000 + $78,000) BRIEF EXERCISE 11-7 Annual depreciation expense: ($8,000 – $1,000)/5 = $1,400 Book value, 1/1/11: $8,000 – (2 x $1,400) = $5,200 Depreciation expense, 2011: ($5,200 – $500)/2 = $2,350 BRIEF EXERCISE 11-8 Recoverability test: Future net cash flows ($500,000) < Carrying amount ($520,000); therefore, the asset has been impaired. Journal entry: Loss on Impairment. .................................... 120,000 Accumulated Depreciation
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($520,000 – $400,000). ....................... 120,000
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BRIEF EXERCISE 11-9 Inventory. ................................................................ 73,500 Accumulated Depletion. .............................. 73,500 $400,000 + $100,000 + $80,000 – $160,000 = $105 per ton 4,000 700 X $105 = $73,500 BRIEF EXERCISE 11-10 (a) Asset turnover ratio: $7,867 = 1.109 times $7,745 + $6,445 2 (b) Profit margin on sales: $854 = 10.86% $7,867 (c) Rate of return on assets: 1. 1.109 X 10.86% = 12.04% 2. $854 = 12.04% $7,745 + $6,445 2
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*BRIEF EXERCISE 11-11 2010: $50,000 X 20% = $10,000 2011: $50,000 X 32% = 16,000 2012: $50,000 X 19.2% = 9,600 2013: $50,000 X 11.52% = 5,760 2014: $50,000 X 11.52% = 5,760 2015: $50,000 X 5.76%
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This note was uploaded on 08/31/2009 for the course DRXL 100 taught by Professor All during the Spring '09 term at Drexel.

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Chapter 11_Solutio - SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 11-1 2010($50,000 $2,000 X 23,000 160,000($50,000 $2,000 X 31,000 160,000 = $6,900

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