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Solutions.W09.final

Solutions.W09.final - 1 CONCORDIA UNIVERSITY F INANCIAL...

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1 CONCORDIA UNIVERSITY FINANCIAL ACCOUNTING DEPARTMENT OF ACCOUNTANCY COMM 217 ALL SECTIONS SUGGESTED SOLUTION FINAL EXAMINATION WINTER 2009 Question 1 (24 marks) Multiple-choice (1.5 marks per correct answer) 1. c 2. b 3. b 4. c 5. b 6. b 7. a 8. c 9. d 10. b 11. a 12. c 13. b 14. c 15. c 16. b

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2 QUESTION 2 (19 marks) Req. 1 (3 marks) The acquisition cost of the machine = \$80,000 + 2,000 + 1,000 = \$83,000 Equipment (or Machinery) ........................................ 83,000 Cash .................................................................... 33,000 Notes Payable .................................................... 50,000 Req. 2 (5 marks) a. Straight-line method 2006: Amortization expense = (\$83,000 – 1,500) / 10 years = \$8,150 2007: Amortization expense = \$8,150 b. Double-declining-balance method 2006: Amortization expense = (\$83,000 – 0 ) x (2/10) = \$16,600 2007: Amortization expense = (\$83,000 – 16,600 ) x (2/10) = \$13,280 Req. 3 (2 marks) The \$10,000 is a capital expenditure , because the replacement of a major part of the machine increased its useful life and its residual value. Req. 4 (3 marks) Net book value of the machine after the replacement, Jan. 1, 2008 = \$83,000 + 10,000 – \$8,150 x 2 = \$76,700 Remaining useful life = 10 – 2 + 4 = 12 years Amortization expense 2008 = (\$76,700 – 2,300 ) / 12 = \$6,200 Req. 5 (6 marks) Amortization expense from January 1 to June 30, 2009 = \$6,200 x (6/12) = \$3,100 Amortization expense ............................................... 3,100 Accumulated Amortization ................................ 3,100
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Solutions.W09.final - 1 CONCORDIA UNIVERSITY F INANCIAL...

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