w3 homework answers[1]

w3 homework answers[1] - Chapter 11 Homework Brief Exercise...

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Chapter 11 Homework Brief Exercise 11-11 Because the undiscounted sum of future cash flows of $24 million is less than book value of $26.5 million, there is an impairment loss. The impairment loss is calculated as follows: Book value $26.5 million Fair value 21 .0 million Impairment loss $ 5.5 million
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Brief Exercise 11-14 Annual maintenance on machinery , $5,400 - This is an example of normal repairs and maintenance . Future benefits are not increased; therefore the expenditure should be expensed in the period incurred. Remodeling of offices , $22,000 - This is an example of an improvement . The cost of the remodeling should be capitalized and depreciated, either by (1) substitution, (2) direct capitalization of the cost, or (3) a reduction of accumulated depreciation. Rearrangement of the shipping and receiving area , $35,000 - This is an example of a rearrangement . Because the rearrangement increased productivity, the cost should be capitalized and depreciated. Addition of a security system , $25,000 - This is an example of an addition . The cost of the security system should be capitalized and depreciated. Exercise 11-1 1. Straight-line: $33,000 - 3,000 = $6,000 per year 5 years 2. Sum-of-the-years’ digits: Year Depreciable Base X Depreciation Rate per Year = Depreciation 2009 $30,000 $10,000 2010 30,000 8,000 2011 30,000 6,000 2012 30,000 4,000 2013 30,000 2,000 Total $30,000
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Exercise 11-1 (concluded) 3. Double-declining balance: Straight-line rate of 20% (1 ÷ 5 years) x 2 = 40% DDB rate. Year
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w3 homework answers[1] - Chapter 11 Homework Brief Exercise...

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