Solution-Final-W08 - COMM 217 Winter 2008 Solution to the...

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COMM 217 – Winter 2008 Solution to the Final Exam Question 1 (24 marks; 1.5 mark each) 1. B 2. C 3. D 4. D 5. C 6. A 7. D 8. B 9. D 10. C 11. A 12. B 13 D 14. B 15. C 16. D 1
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Question 2 (18 marks) 1. Total acquisition cost = $320,000 + $5,000 + $2,000 = $327,000 Equipment 327,000 Common shares (50,000 x $6) 300,000 Cash 27,000 2. Repairs and maintenance expense 1,500 Cash 1,500 This expenditure is an expense for the period . It does not affect the equipment account or accumulated amortization on the equipment. Therefore, it has no impact on the book value of the equipment. 3. a) Amortization expense – 2006 = (Cost – Residual value) / Useful life = ($327,000 – 7,000 ) / 5 years = $64,000 Amortization expense – 2007 = $64,000 b) Amortization rate = 2 x (1/Useful Life) = 2 x (1/5) = 40% Amortization expense – 2006 = (Cost – Accumulated Amortization) x Amortization rate = ($327,000 – 0 ) x 40% = 130,800 Amortization expense – 2007 = ($327,000 – 130,800 ) x 40% = 78,480 4. Accumulated amortization at March 31, 2008 = $64,000 x 2.25 years = $144,000 Book value at March 31, 2008 = $327,000 – $144,000 = $183,000 Loss on sale of equipment = $150,000 – $183,000 = –$33,000 Amortization expense ($64,000 x 3/12) 16,000 Accumulated amortization 16,000 Cash 50,000 Note receivable 100,000 Accumulated amortization 144,000 Loss on sale of equipment 33,000 Equipment 327,000 2
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Question 3 (18 marks) 1. Number of units sold = 1,000 + 1,200 = 2,200 Cost of goods sold = 600 x $30 + 900 x $32 + 700 x $34 = $70,600 Alternative computation : Cost of goods sold = Cost of goods available for sale – Cost of ending inventory = (600 x $30 + 900 x $32 + 1,500 x $34) – 800 x $34
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Solution-Final-W08 - COMM 217 Winter 2008 Solution to the...

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