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)
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
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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