PPE_Problem - Question 2 On 2/1/2001, Ninja, Inc. began...

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ACCT 301 Question 1 On March 1, 2001, Ninja, Inc. purchased land, a building, and a silver mine for $45,000,000. The appraised fair value of the land (excluding the silver deposits) is $12,000,000, the fair value of the building is $5,000,000 and the fair value of the silver mine is $25,000,000. The economic life of the building is 20 years and it has an estimated salvage value of $460,000. The silver mine is estimated to have deposits of 5,000,000 ounces of silver. The mine produced 200,000 ounces of silver in 2001 and 800,000 ounces of silver in 2002. Ninja, Inc. sold 180,000 ounces of silver in 2001 and 810,000 ounces of silver in 2002. A. Record the acquisition. B. Calculate depreciation for 2001 and 2002 under the following depreciation methods: 1. Straight line 2001:____________________________ 2002:____________________________ 2. 180% Declining Balance 2001:____________________________ 2002:____________________________ C. Record depletion in 2002
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Unformatted text preview: Question 2 On 2/1/2001, Ninja, Inc. began construction of a submarine that will be sold to the U.S. government. On 1/1/2001, Ninja, Inc. borrowed $1,000,000 at an interest rate of 9% specifically to finance part of the construction of this submarine. In addition, it had the following debt during 2001. $2,000,000 12% $3,000,000 10% In 2002, Ninja, Inc. also incurred additional debt of $1,500,000 at an interest rate of 14% for purposes other than construction of the submarine. It incurred the following expenditures in 2001 and 2002: Date Amount 2/1/01 $ 1,600,000 5/1/01 $ 1,400,000 10/1/01 $ 1,000,000 3/1/02 $ 2,000,000 6/1/02 $ 1,000,000 The submarine was completed on 7/1/02. Assume that the submarine is a qualifying asset for interest capitalization. REQUIRED: 1. Calculate the ending balance in the Construction in Process account as of 12/31/01. 2. Calculate the total cost of the submarine as of completion....
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This note was uploaded on 09/20/2011 for the course ACCT 301 taught by Professor Staff during the Spring '11 term at S.F. State.

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