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chap11soln[1]

# chap11soln[1] - SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE...

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SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 11-1 2007: (\$42,000 – \$2,000) X 23,000 = \$5,750 160,000 2008: (\$42,000 – \$2,000) X 31,000 = \$7,750 160,000 BRIEF EXERCISE 11-2 (a) \$60,000 – \$6,000 = \$6,750 8 (b) \$60,000 – \$6,000 X 4/12 = \$2,250 8 BRIEF EXERCISE 11-3 (a) (\$60,000 – \$6,000) X 8/36* = \$12,000 (b) [(\$60,000 – \$6,000) X 8/36] X 9/12 = \$9,000 *[8(8 + 1)] ÷ 2 BRIEF EXERCISE 11-4 (a) \$60,000 X 25%* = \$15,000 (b) (\$60,000 X 25%) X 3/12 = \$3,750 BRIEF EXERCISE 11-5 Depreciable Base = (\$25,000 + \$200 + \$125 + \$500 + \$475) – \$3,000 = \$23,300. BRIEF EXERCISE 11-6 Asset Depreciation Expense A (\$70,000 – \$7,000)/10 = \$6,300 B (\$50,000 – \$10,000)/5 = 8,000 C (\$82,000 – \$4,000)/12 = 6,500 \$20,800 Composite rate = \$20,800/\$202,000 = 10.3% Composite life = \$181,000*/\$20,800 = 8.7 years BRIEF EXERCISE 11-7 Annual depreciation expense: (\$7,000 – \$1,000)/5 = \$1,200 Book value, 1/1/08: \$7,000 – (2 x \$1,200) = \$4,600 Depreciation expense, 2008: (\$4,600 – \$500)/2 = \$2,050 BRIEF EXERCISE 11-8 Recoverability test: Future net cash flows (\$500,000) < Carrying amount (\$540,000); therefore, the asset has been impaired. Journal entry: Loss on Impairment . .............................................................. 140,000

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Accumulated Depreciation . ......................................... 140,000 BRIEF EXERCISE 11-9 Inventory . .............................................................................................. 72,625 Accumulated Depletion . ....................................................... 72,625 \$400,000 + \$100,000 + \$75,000 – \$160,000 = \$103.75 per ton 4,000 BRIEF EXERCISE 11-10 (a) Asset turnover ratio: \$7,109 = 1.104 times \$6,205 + \$6,675 2 (b) Profit margin on sales: \$647 = 9.1% \$7,109 (c) Rate of return on assets: (1) 1.104 X 9.1% = 10.05% (2) \$647 = 10.05% \$6,205 + \$6,675
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chap11soln[1] - SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE...

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