Exam 3 - Accounting 165 Summer 2010 Chapters 10-12 This examination consists of eight problems worth 100 points Answer the problems in this Word

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Accounting 165 Summer 2010 Chapters 10-12 This examination consists of eight problems worth 100 points. Answer the problems in this Word document and return to me via email no later than 6:00 am (Central Daylight Time) on Sunday, June 27, 2010. Type your name and student ID at the end of the following statement: “On my honor, this examination represents my work alone. I have not consulted with anyone else when completing this exam. I have not copied this examination, and all scratch paper and/or files will be destroyed after I receive my grade.” Name and ID number: Maureen waweru 000710338 Problem 1 (12 points) During 2010 and 2011, Sawyer Corporation experienced several transactions involving plant assets. A number of errors were made in recording some of these transactions. Required : For each item listed below, indicate the effect of the error (if any) on the net book value (cost minus accumulated depreciation) of plant assets at 12/31/10, on 2010 net income, on the net book value of plant assets at 12/31/11, and on 2011 net income, using the table below. Use the following codes: O = Overstate; U = Understate; NE = No Effect. Transactions: 1. The cost of installing a new computer system in 2010 was not recorded in 2010. It was charged to expense in 2011. 2. In 2011 Sawyer erroneously capitalized the $15,000 cost of training clerical workers to use the new computer system. The cost is erroneously to be written off over the expected life of the new computer system. 3. A major overhaul of factory machinery in 2010, which extended its useful life by 5 years, was charged to accumulated depreciation in 2010. 4. Interest cost qualifying for capitalization in 2010, when a building was constructed, was charged to interest expense. 5. In 2010 land was bought for an employee parking lot. The $2,000 title search fee was charged to expense. 6. The cost of moving several manufacturing facilities from metropolitan locations to suburban areas in 2010 was capitalized. The cost was to be written off over a 10-year period; and depreciation began in 2010. Net book value 2010 Net book value 2011 of plant assets net of plant assets net at 12/31/10 income at 12/31/11 income 1. U U Ne u 2. O O O O 3. U Ne U Ne 4. U U U U 5. Ne U Ne U 6. O O O O
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Problem 2 (12 points) Beeman Company exchanged machinery with an appraised value of $1,755,000, a recorded cost of $2,700,000 and Accumulated Depreciation of $1,350,000 with Lacey Corporation for machinery Lacey owns. The machinery has an appraised value of $1,695,000, a recorded cost of $3,240,000, and Accumulated Depreciation of $1,782,000. Lacey also gave Beeman $60,000 in the exchange. Assume depreciation has already been updated. Required:
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This note was uploaded on 06/28/2010 for the course ACCT 185 taught by Professor Bass during the Spring '10 term at Institute for Advanced Study.

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Exam 3 - Accounting 165 Summer 2010 Chapters 10-12 This examination consists of eight problems worth 100 points Answer the problems in this Word

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