Chapter 11 Solution - Exercise 11-6 Requirement 1...

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Exercise 11-6 Requirement 1 Asset Cost Residual Value Depreciable Base Estimated Life(yrs.) Depreciation per Year (straight line) JPY Stoves 15,000 3,000 12,000 6 2,000 Refrigerators 10,000 1,000 9,000 5 1,800 Dishwashers 8,000 500 7,500 4 1,875 Totals 33,000 4,500 28,500 5,675 5,675 Group depreciation rate = = 17.2% (rounded) 33,000 Group life = 28,500 = 5.02 years (rounded) 5,675 Requirement 2 To record the purchase of new refrigerators. Refrigerators. .............................................................. 2,850 ............................................................................ Cash ........................................................................... 2,850 To record the sale of old refrigerators. Cash. ........................................................................... 250 Accumulated depreciation (difference) ......................... 1,250 ............................................................... Refrigerators ........................................................................... 1,500 1
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Exercise 11-10 Requirement 1 a. To record the purchase of a patent. January 1, 2004 Patent. ......................................................................... 750,000 ............................................................................ Cash ....................................................................... 750,000 To record amortization on the patent. December 31, 2004 and 2005 Amortization expense ( 750,000 ÷ 10 years) .................. 75,000 .......................................................................... Patent ......................................................................... 75,000 b. To record the purchase of a franchise. 2006 Franchise. ................................................................... 500,000 ............................................................................ Cash ....................................................................... 500,000 c. To record research and development expenses. 2006 Research and development expense. .......................... 380,000 ............................................................................ Cash ....................................................................... 380,000 2
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Exercise 11-10 (concluded) Year-end adjusting entries Patent: To record amortization on the patent. December 31, 2006 Amortization expense (determined below) ..................... 120,000 .......................................................................... Patent ....................................................................... 120,000 Calculation of annual amortization after the estimate change: (AUD in thousands) 750 Cost 75 Old annual amortization ( 750 ÷ 10 years) x 2 years 150 Amortization to date (2004-2005) 600 Unamortized cost (balance in the patent account) ÷ 5 Estimated remaining life 120 New annual amortization Franchise: To record amortization of franchise. December 31, 2006
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Chapter 11 Solution - Exercise 11-6 Requirement 1...

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