2223_S09_hwk_8_solution

# 2223_S09_hwk_8_solution - HA 2223 Spring 2009 Homework 8...

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HA 2223 – Spring 2009 Homework 8 Solution M8–4. Machinery (original cost) \$21,000 Accumulated depreciation at end of third year Depreciation expense = (\$21,000 cost – \$1,000 residual value) x 1/4 years = \$5,000 Accumulated depreciation = \$5,000 annual depreciation expense x 3 yrs = 15,000 Net book value at the end of the third year \$6,000

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M8–5. Machinery (original cost) \$25,000 Accumulated depreciation at end of first year: Depreciation expense = (\$25,000 – \$0 acc. depr.) x 2 / 5 yrs. = \$10,000 10,000 Net book value at end of first year \$15,000 Machinery (original cost) \$25,000 Accumulated depreciation at end of second year: Depreciation expense = (\$25,000 - \$10,000 acc. depr.) x 2 / 5 = \$6,000 Accumulated depreciation = Year 1, \$10,000 + Year 2, \$6,000 = 16,000 Net book value at end of second year \$9,000 Machinery (original cost) \$25,000 Accumulated depreciation at end of third year: Depreciation expense = (\$25,000 - \$16,000 acc. depr.) x 2 / 5 = \$3,600 Accumulated depreciation = (\$16,000 + Year 3, \$3,600) = 19,600 Net book value at end of third year \$5,400 M8–6. Machinery (original cost) \$21,000 Accumulated depreciation at end of third year Depreciation expense per machine hour = (\$21,000 cost – \$1,000 salvage value) = \$1 per machine hour 20,000 machine hours Accumulated depreciation Yr 1 Yr 2 Yr 3 = \$1 depreciation expense per machine hr x (3,200+7,050+7,500) hrs = 17,750 Net book value at end of third year \$3,250

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M8–8. Store fixtures (original cost) \$6,000 Accumulated depreciation at end of tenth year Depreciation expense = (\$6,000 cost – \$800 residual value) x 1/13 years = \$400 Accumulated depreciation = \$400 annual depreciation expense x 10 yrs = 4,000 Net book value at end of tenth year (i.e., NBV immediately prior to sale) \$2,000 Journal entry to record the disposal is as follows. Cash (+A). ..................................................................... 3,000 Accumulated depreciation, store fixtures ( - XA, +A). ..... 4,000 Store fixtures ( - A) . ............................................. 6,000 Gain on sale of store fixtures (+Gain, +SE) . ..... 1,000
P8–6. Req. 1

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## This note was uploaded on 10/21/2009 for the course H ADM 223 taught by Professor Pstrebel during the Spring '07 term at Cornell University (Engineering School).

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2223_S09_hwk_8_solution - HA 2223 Spring 2009 Homework 8...

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