2811422514

2811422514 - Chapter 7 Plant Assets, Natural Resources, and...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 7 Plant Assets, Natural Resources, and Intangibles Check Points (5 min.) CP 7-1 1. Property, Plant and Equipment Millions 2. Property, plant and equipment, at cost……………… $26,915 Less: Accumulated depreciation……………………… (13,007 ) Property, Plant and equipment, book value………… $13,908 Book value is less than cost because accumulated depreciation is subtracted from cost to compute book value. Chapter 7 Plant Assets, Natural Resources, and Intangibles 199
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
(5 min) CP 7-2 The related costs (real estate commission, back property tax, removal of a building, and survey fee) are included as part of the cost of the land because the buyer of the land must incur these costs to get the land ready for its intended use. After the land is ready for use, the related costs (listed above) would be expensed. (10 min.) CP 7-3 Land ($150,000 × .50) ………………………. 75,000 Building ($150,000 × .375) …………………. 56,250 Equipment ($150,000 × .125) ……………… 18,750 Note Payable……………………………… 150,000 Estimated Market Value Percent of Total Land…………………. $ 80,000 $80,000 / $160,000 = 50.0% Building……………. . 60,000 $60,000 / $160,000 = 37.5 Equipment…………. . 20,000 $20,000 / $160,000 = 12.5 Total……………….… $160,000 100.0 % Financial Accounting 6/e Solutions Manual 200
Background image of page 2
(10-15 min.) CP 7-4 Income Statement Revenues CORRECT Expenses UNDERSTATED Net income OVERSTATED Balance Sheet Current assets CORRECT Total liabilities CORRECT Plant assets OVERSTATED Owners’ equity OVERSTATED Total liabilities Total assets OVERSTATED and owners’ equity OVERSTATED Chapter 7 Plant Assets, Natural Resources, and Intangibles 201
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
(10 min.) CP 7-5 1. First-year depreciation: Straight-line ($20,000,000 – $6,000,000) / 5 years. .. $2,800,000 Units-of-production [($20,000,000 – $6,000,000) / 5,000,000 miles] × 750,000 miles…………………. $2,100,000 Double-declining-balance ($20,000,000 / 5 years × 2). $8,000,000 2. Book value: Straight- Line Units-of- Production Double- Declining- Balance Cost……………………. $20,000,000 $20,000,000 $20,000,000 Less Accumulated Depreciation………. . (2,800,000 ) (2,100,000 ) (8,000,000 ) Book value……………. $17,200,000 $17,900,000 $12,000,000 Financial Accounting 6/e Solutions Manual 202
Background image of page 4
(10 min.) CP 7-6 Third-year depreciation: a. Straight-line ($20,000,000 – $6,000,000) / 5 years…. . $2,800,000 b. Units-of-production [($20,000,000 – $6,000,000) / 5,000,000 miles] × 1,250,000 miles………………… $3,500,000 c. Double-declining-balance: Year 1 ($20,000,000 × 2/5) = $8,000,000 Year 2 ($20,000,000 – $8,000,000) × 2/5 = $4,800,000 Year 3 ($20,000,000 – $8,000,000 – $4,800,000 = $7,200,000; $7,200,000 – $6,000,000 residual value)…… $1,200,000 Chapter 7 Plant Assets, Natural Resources, and Intangibles 203
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
(10 min.) CP 7-7 1. The double-declining-balance (DDB) method offers the tax
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 83

2811422514 - Chapter 7 Plant Assets, Natural Resources, and...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online