Lesson%209%20Solutions - Suggested Solutions for ACCT 351...

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Suggested Solutions for ACCT 351 Adapted from Beechy, T. H., & Conrod, J. E. D. (2005). Solutions manual to accompany intermediate accounting, volume 1 (3 rd Can. ed.). Toronto: McGraw-Hill Ryerson. Reproduced with permission. Page 1 of 15 Lesson 9, Chapter 10 Assignment 10-4 (text, p. 588) Requirement 1 Year (a) DB 30% (b) Productive (c) SL (d) SYD Output 1 $5,400 $1,920 $2,800 $4,800 2 3,780 2,880 2,800 4,000 a. $18,000 × .3; ($18,000 – $5,400) × .3 b. ($18,000 - $1,200) ÷ 105,000 = $0.16; $0.16 × 12,000; $0.16 × 18,000 c. ($18,000 – $1,200) × 1/6 = $2,800 d. ($18,000 – $1,200) × 6/(6 + 5 + 4 + 3 + 2 + 1); × 5/21 Requirement 2 Year (a) DB 20% (b) Productive (c) SL (d) SYD Output 1 $3,600 $1,920 $1,680 $3,055 2 2,880 2,880 1,680 2,749 a. ($18,000 × .2); (($18,000- $3,600) × .2) b. ($18,000 – $1,200) × 1/10 c. ($18,000– $1,200) × 10/(10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1); 9/55 Conclusions based on comparisons of 1 and 2: When years of life enter directly into the amortization calculation, changing the years of life has a material impact on amortization levels ($2,800 vs. $1,680, etc). For other methods, the years of life indirectly affect the calculation (amortization per unit of product) and may not affect initial amortization.
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