Ch09 - Chapter 9 Reporting and Interpreting Property,...

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Chapter 9 Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles EXERCISES E9–3 (1) R; (2) C; (3) C; (4) R ; (5) C; (6) C; (7) N; (8) C; (9) R; (10) N. E9–7 Req. 1 Apportionment of price paid ($178,000) plus transfer costs ($2,000): Appraised Value Apportionment of Lump-Sum Cost Item Amount Ratio Total Cost Paid Apportioned Cost Building. ................... $150,000 .75 x $180,000 = $135,000 Land. ........................ 50,000 .25 x 180,000 = 45,000 $200,000 1.00 $180,000 Total cost of building = Apportioned cost per above, $135,000 + Renovation cost, $23,000 =$158,000 Req. 2 Building (A). ..................................................................... 158,000 Land (A). .......................................................................... 45,000 Cash (A) ($178,000 + $2,000 + $23,000) . ............... 203,000 Req. 3 ($158,000 cost – $14,000 residual value) ÷ 12 years = $12,000 Req. 4 Land . .................................................................................. $ 45,000 Building . ............................................................................. 158,000 Less: Accumulated amortization ($12,000 x 2). ................ 24,000 134,000 Total book value at end of Year 2. .................................... $179,000
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E9–10 Req. 1 (2008): Amortization expense (+E - SE). .................................... 5,000 Accumulated amortization, equipment (+XA - A). ..... 5,000 Adjusting entry for 2008 ($80,000 – $5,000) ÷ 15 years = $5,000. Req. 2 (2009): Repair expense (+E - SE). .............................................. 850 Cash ( - A). ..................................................................... 850 Ordinary repairs incurred. Equipment (+A). ................................................................. 10,500 Cash ( - A). ..................................................................... 10,500 Extraordinary repairs incurred and capitalized. Req. 3 (December 31, 2009): Adjusting entry for 2009 amortization: Amortization expense (+E - SE). ..... ………………. 7,625 Accumulated amortization, equipment (+XA - A) 7,625 Equipment cost. .......................................................... $80,000 Accumulated amortization through 2008. .................. 55,000 Net book value before overhaul. ............................. 25,000 Extraordinary repairs capitalized. ............................... 10,500 Net book value after overhaul. ................................ 35,500 Less residual value. .................................................... 5,000 Balance to be amortized over remaining life of 4 years $30,500 Remaining life: 15 years – ($55,000 ÷ $5,000) years = 4 years Amortization, 2009: $30,500 ÷ 4 years = $7,625
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Req. 4 Date Assets Liabilities Shareholders’ Equity Dec. 31, 2008 Accumulated amortization –5,000 No effect Amortization expense –5,000 During 2009 Cash –850 No effect Repair expense –850 Cash Equipment –10,500 +10,500 No effect
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This note was uploaded on 12/03/2010 for the course JMSB 212 taught by Professor Michael during the Fall '10 term at Concordia Canada.

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Ch09 - Chapter 9 Reporting and Interpreting Property,...

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