Chapter_22_Solutions

Chapter_22_Solutions - Chapter 22 EXERCISE 22-1 (a) The net...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 22 EXERCISE 22-1 (a) The net income to be reported in 2010, using the retrospective approach, would be computed as follows: Income before income tax.................................. $700,000 Income tax (35% X $700,000)............................. 245,000 Net income........................................................... $455,000 (b) Construction in Process................................................. 170,000 Deferred Tax Liability ($170,000 X 35%).............................. 59,500 Retained Earnings.............................................................. 110,500* *($170,000 X 65% = $110,500) EXERCISE 22-2 (a) Inventory................................................................................. 11,000* Retained Earnings.................................................................... 11,000 *($19,000 + $21,000 + $25,000) – ($16,000 + $18,000 + $20,000) (b) Net Income (FIFO) 2009 $19,000 2010 21,000 2011 25,000 (c) Inventory................................................................................ 22,000* Retained Earnings................................................................... 22,000 *($19,000 + $21,000 + $25,000) – ($12,000 + $14,000 + $17,000) EXERCISE 22-6 (a) Depreciation to date on equipment Sum-of-the-years’-digits depreciation 2007 (5/15 X $450,000) $150,000 2008 (4/15 X $450,000) 120,000 2009 (3/15 X $450,000) 90,000 $360,000 Cost of equipment................................... $465,000 Depreciation to date................................ 360,000 Book value (December 31, 2009)...........$105,000 Book value – Salvage value = Depreciable cost $105,000 – $15,000 = $90,000 Depreciation for 2010: $90,000/2 = $45,000 Depreciation Expense......................................................... 45,000 Accumulated Depreciation—Equipment............................ 45,000 (b) Depreciation to date on building $780,000/30 years = $26,000 per year $26,000 X 3 = $78,000 depreciation to date Cost of building.......................................$780,000 Depreciation to date................................ 78,000 Book value (December 31, 2009)...........$702,000 Depreciation for 2010: $702,000/(40 – 3) = $18,973 Depreciation Expense......................................................... 18,973 Accumulated Depreciation—Buildings.............................. 18,973 EXERCISE 22-7 (a) Change from sum-of-the-years-digits to straight-line Cost of depreciable assets........................................... $90,000 Depreciation in 2009 ($90,000 X 4/10).......................... 36,000 Book value at December 31, 2009................................ $54,000 Depreciation for 2010 using straight-line depreciation Book value at December 31, 2009................................ $54,000 Estimated useful life...................................................... 3 years Depreciation for 2010 ($54,000 ÷ 3).............................. $18,000 PANNEBECKER INC....
View Full Document

This note was uploaded on 03/01/2010 for the course ACCT 30801E taught by Professor Darland during the Spring '10 term at Buena Vista.

Page1 / 10

Chapter_22_Solutions - Chapter 22 EXERCISE 22-1 (a) The net...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online