ACCT Assignments Chapter 9

ACCT Assignments Chapter 9 - a Chapter Assignments 467...

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a Chapter Assignments 467 CHAPTER ASSIGNMENTS Short Exercises LO1 Management Issues at SE 1. Indicate whether each of the following actions is primarily related to (a) acquisition of long-term assets, (b) evaluating the adequacy of financing of long-term assets, or (c) applying the matching rule to long-term assets. 1. Deciding between common stock and long-term notes for the raising of funds 2. Relating the acquisition cost of a long-term asset to the cash flows generated by the asset 3. Determining how long an asset will benefit the company 4. Deciding to use cash flows from operations to purchase long-term assets 5. Determining how much an asset will sell for when it is no longer useful to the company 6. Calculating free cash flow 1.01 Free Cash Flow SE 2. Rak Corporation had cash flows from operating activities during the past year of $97,000. During the year, the company expended $12,500 for dividends; expended $79,000 for property, plant, and equipment; and sold property, plant, and equipment for $6,000. Calculate the company's free cash flow. What does the result tell you about the company? L02 Determining Cost of Long-Term Assets SE 3. Smith Auto purchased a neighboring lot for a new building and parking lot. Indicate whether each of the following expenditures is properly charged to (a) Land, (b) Land Improvements, or (c) Buildings. 1. Paving costs 2. Architects' fee for building design 3. Cost of clearing the property 4. Cost of the property 5. Building construction costs 6. Lights around the property 7. Building permit 8. Interest on the construction loan LO2 Group Purchase SE 4. Lian Company purchased property with a warehouse and parking lot for $1,500,000. An appraiser valued the components of the property if purchased separately as follows: Land $ 400,000 V Land improvements 200,000 Building 1,000,000 Total $1,600,000 Determine the cost to be assigned to each component. L03 Straight-Line Method SE 5. Kelly's Fitness Center purchased a new step machine for $16,500. The apparatus is expected to last four years and have a residual value of $1,500. What will the depreciation expense be for each year under the straight-line method?
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468 CHAPTER 9 Long-Term Assets L03 Production Method / SE 6. Assume that the step machine in SE 5 has an estimated useful life of V 8,000 hours and was used for 2,400 hours in year 1, 2,000 hours in year 2, 2,200 hours in year 3, and 1,400 hours in year 4. How much would depreciation expense be in each year? L03 Double-Declining-Balance Method ,/ SE 7. Assume that the step machine in SE 5 is depreciated using the double- ' declining-balance method. How much would depreciation expense be in each year? L04 Disposal of Plant Assets: No Trade-In 5E 8. Alarico Printing owned a piece of equipment that cost $16,200 and on which / it had recorded $9,000 of accumulated depreciation. The company disposed of V the equipment on January 2, the first day of business of the current year. 1. Calculate the carrying value of the equipment.
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This note was uploaded on 02/18/2012 for the course ACCOUNTING 2301 taught by Professor Dr.susaneason during the Spring '12 term at San Jacinto.

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ACCT Assignments Chapter 9 - a Chapter Assignments 467...

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