Tutor Question chapter 9+10 word 07 - E9-28: 1.What is the...

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Unformatted text preview: E9-28: 1.What is the cost of the machine to Freddys Restoration Company? Machine cost $45,000Sales tax2,000Delivery costs1,000Assembly cost1,400Cost of machine$49,4002.What is the amount of the first full years depreciation if Freddys uses the straight -line method? 49,400Depreciation expense= = $3,293 depreciation expense/year15 yearsE9-301Jan. 1lease property................................................9,413Lease liability.....................................9,413To record a copy machine acquired under a 5 years noncancelable lease.Jan.31Lease liability................................................122Interest Expense.............................................78Cash....................................................200To record annual lease payment under capital lease2Jan.1there is no entry required because, this is the operating lease. The payment will be made at the end of each monthJan.31 Rent Expense...........................................200Cash............................................................200To record monthly rent of office buildingE9-331.2008a.Straight-line:26,000 - 1,000Depreciation expense = = $5,000/ year5b.Units-of-production:26,000 1,000Depreciation expense = x 9,000 = $2,045110,0002009a.Straight-line:,26,000 - 1,000Depreciation expense = = $5,000/ year5b.Units-of-production:26,000 1,000Depreciation expense = x 24,000 = $5,455110,0002.Units-of-production depreciation method in which the cost of an asset is allocated to each period on the basis of the productive output or use of the asset during the period is more closely reflects the used-up service potential of the car. In this method, cost salvage is divided by the assets useful life measured in miles (not in years as in straight-line method) to acquire the average depreciation expense per mile, and then multiply by the usage for the year. E 9-37 (p. 435)Original cost ........................................................................$700,000Accumulated Depreciation, Building......................................150,000Book Value.............................................................................550,000Accumulated Depreciation, Building..................150,000Loss on Impairment of Building and Land.........430,000Building and Land (700,000 120,000). .580,000(Recognized $430,000 impairment loss on building and land)E 9-38 (p.435)Accounting for the Disposal of AssetsUsing straight-line method, accumulated depreciation of the truck (after 4 years):Book value of the truck: $80,000 $40,000 = $40,0001.Canlas Company sells the truck for $45,000 cash.Cash...............................................................................$45,000Accumulated Depreciation, Truck.................................40,000Truck..................................................................80,000Gain on Sale of Truck.........................................5,000Sold $80,000 truck at a gain of $5,0002.Canlas Company sells the truck for $38,000 cash.Canlas Company sells the truck for $38,000 cash....
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This note was uploaded on 06/20/2011 for the course ECON 123 taught by Professor Mrews during the Spring '11 term at Korea Advanced Institute of Science and Technology.

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Tutor Question chapter 9+10 word 07 - E9-28: 1.What is the...

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