Intermediate 2 Week 3 Solutions - Intermediate Accounting 2 Week 3 Solutions Note-there is no solution available for the research item See rubric Comp

Intermediate 2 Week 3 Solutions - Intermediate Accounting 2...

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Intermediate Accounting 2Week 3 SolutionsNote-there is no solution available for the research item. See rubric.Comp Problem P11-20(AICPA adapted solution)1.BLAKE CORPORATIONDepreciation and Amortization ExpenseFor the Year Ended December 31, 2010Building:Book value 1/1/10($1,200,000 - $263,100)$936,900150% declining balance rate[(100%  25) x 1.5)]x6%Total depreciation on building$ 56,214Machinery and equipment:Balance, 1/1/10$900,000Deduct: Machine destroyedby fire(23,000)$877,000Depreciationx 10%87,700Machine destroyed by fire,4/1/10$ 23,000Depreciation from 1/1 to 4/1/10(10% x 3/12)x 2.5%575Purchased 7/1/10$310,000Depreciation from 7/1 to12/31/10 (10% x 6/12)x 5%15,500Total depreciation on
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machinery and equipment103,775Automotive equipment:Depreciation on $115,000balance, 1/1/10$ 18,000Deduct: Depreciation on cartraded in 1/2/10(SYD 3rd year 2/10 x $9,000)(1,800)16,200Car purchased, 1/2/10$ 12,000Depreciation SYD 1st yearx 4/104,800Total depreciation onautomotive equipment21,000
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P11-20(continued)1. (continued)Leasehold improvements:Cost, 5/1/10$168,000Amortization period(5/1/10 to 12/31/16) 80 mos.Amortization per month$ 2,100Amortization for 2010(5/1 to 12/31/10)x 8 mos.Total amortization onleasehold improvements16,800Total depreciation and amortizationexpense for 2010$197,789BLAKE CORPORATIONAccumulated Depreciation and AmortizationDecember 31, 2010Accumulated depreciation: Building at 12/31/10Balance, 1/1/10$263,100Depreciation for 201056,214Balance, 12/31/10$319,314Accumulated depreciation: Machinery and equipmentat 12/31/10Balance, 1/1/10$250,000Depreciation for 2010103,775$353,775Deduct: Machine destroyed by fire(5 x 10% x $23,000)(11,500)Balance, 12/31/10342,275
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Accumulated depreciation: Automotive equipmentat 12/31/10Balance, 1/1/10$ 84,600Depreciation for 201021,000$105,600Deduct: Car traded in ($9,000 - $2,700)(6,300)Balance, 12/31/1099,300Accumulated amortization: Leasehold improvementsat 12/31/10Amortization for 2010$ 16,800Balance, 12/31/1016,800Total accumulated depreciation andamortization at 12/31/10$777,689
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P11-20(continued)2.BLAKE CORPORATIONGain or Loss from Disposal of AssetsFor the Year Ended December 31, 2010Gain on machine destroyed by fire:Insurance recovery$ 15,500Book value of machine destroyed[$23,000 - (5 x 10% x $23,000)](11,500) $ 4,000Loss on car traded in on new car purchase:Book value of car traded in$ 2,700Trade-in allowed ($12,000 - $10,000)(2,000) (700)Net gain on asset disposals for 2010$3,3003.BLAKE CORPORATION
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