hhtfa8e_ch07_sm

hhtfa8e_ch07_sm - Chapter 7 Plant Assets & Intangibles...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 7 Short Exercises (5 min.) S 7-1 1. Property and Equipment, at Cost Millions Aircraft………………………………………………… $ 2,394 Package handling and ground support equipment…………………………………………. 12,225 Computer and electronic equipment……………. 28,165 Vehicles………………………………………………. 586 Facilities and other…………………………………. 1,435 Total cost…………………………………………. . 44,805 Less: Accumulated depreciation………………. . (14,903 ) Net property and equipment…………………… $ 29,902 2. Cost = $44,805 million Book value = $29,902 million Book value is less than cost because accumulated depreciation is subtracted from cost to compute book value. Chapter 7 Plant Assets & Intangibles 3
Background image of page 1

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

View Full DocumentRight Arrow Icon
(5 min) S 7-2 The related costs (real estate commission, back property tax, removal of a building, and survey fee) are included as part of the cost of the land because the buyer of the land must incur these costs to get the land ready for its intended use. After the land is ready for use, the related costs (listed above) would be expensed. (10 min.) S 7-3 Land ($140,000 × .50)………………………. 70,000 Building ($140,000 × .30)…………………. .. 42,000 Equipment ($140,000 × .20)………………. . 28,000 Note Payable……………………………… 140,000 Current Market Value Percent of Total Land…………………. $ 75,000 $75,000 / $150,000 = 50.0% Building……………. .. 45,000 $45,000 / $150,000 = 30.0% Equipment…………. . 30,000 $30,000 / $150,000 = 20.0% Total……………….… $150,000 100.0 % Financial Accounting 8/e Solutions Manual 4
Background image of page 2
(5 min.) S 7-4 Income Statement Revenues CORRECT Expenses UNDERSTATED Net income OVERSTATED (10 min.) S 7-5 1. First-year depreciation: Straight-line ($53,000,000 $5,000,000) / 5 years……. $9,600,000 Units-of-production [($53,000,000 $5,000,000) / 6,000,000 miles] × 775,000 miles……………………. . $6,200,000 Double-declining-balance ($53,000,000 / 5 years × 2). $21,200,000 2. Book value: Straight- Line Units-of- Production Double- Declining- Balance Cost……………………. $53,000,000 $53,000,000 $53,000,000 Less Accumulated Depreciation………. . (9,600,000 ) (6,200,000 ) (21,200,000 ) Book value……………. $43,400,000 $46,800,000 $31,800,000 Chapter 7 Plant Assets & Intangibles 5
Background image of page 3

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

View Full DocumentRight Arrow Icon
(10 min.) S 7-6 Third-year depreciation: a. Straight-line ($53,000,000 $5,000,000) / 5 years…. . $9,600,000 b. Units-of-production [($53,000,000 $5,000,000) / 6,000,000 miles] × 1,275,000 miles………………… $10,200,000 c. Double-declining-balance: Year 1 ($53,000,000 × 2/5) = $21,200,000 Year 2 ($53,000,000 $21,200,000) × 2/5 = $12,720,000 Year 3 ($53,000,000 $21,200,000 $12,720,000)= $19,080,000; $19,080,000 × 2/5……………………………… $7,632,000 Financial Accounting 8/e Solutions Manual 6
Background image of page 4
(10 min.) S 7-7
Background image of page 5

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

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/09/2010 for the course MS&E 240 taught by Professor Vicstanton during the Spring '08 term at Stanford.

Page1 / 90

hhtfa8e_ch07_sm - Chapter 7 Plant Assets & Intangibles...

This preview shows document pages 1 - 6. Sign up to view the full document.

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