1478 per barrel 82000 barrels 1211960 date accounts

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$14.78 per barrel × 82,000 barrels = $1,211,960 Date Accounts and Explanation Debit Credit Oil and Gas Properties 6,400,000 Cash 6,400,000 To record purchase of oil reserves. Oil and Gas Properties 990,000 Cash 990,000 To record payment of costs associated with purchase of oil reserves. Depletion Expense—Oil and Gas Properties 1,211,960 Accumulated Depletion—Oil and Gas Properties 1,211,960 To record depletion. Horngren’s Accounting   10/e    Solutions Manual 10-50
P10-40B Requirement 1 Purchase price to acquire Shurburn Wireless ($360,000 + $540,000) $ 900,000 Market value of Shurburn Wireless’s assets $ 900,000 Less: Shurburn Wireless’s liabilities (540,000) Market value of Shurburn Wireless’s net assets 360,000 Goodwill $ 540,000 Date Accounts and Explanation Debit Credit Assets 900,000 Goodwill 540,000 Liabilities 540,000 Cash 360,000 Note Payable 540,000 To record purchase of Shurburn Wireless. Requirement 2 The acquisition identifies the asset goodwill. Heartland Telecom should measure the fair value of this asset each year. If this asset has increased in value, Heartland should record nothing. If the value of the asset has decreased, Heartland should record an impairment loss and write down goodwill. Horngren’s Accounting   10/e    Solutions Manual 10-51
P10A-41B Date Accounts and Explanation Debit Credit Jan. 1 Office Equipment (new) 135,000 Accumulated Depreciation—Office Equipment 80,000 Office Equipment (old) 140,000 Cash 70,000 Gain on Disposal 5,000 To record exchange of office equipment. Apr. 1 Depreciation Expense—Equipment 2,000 Accumulated Depreciation—Equipment 2,000 To record partial year depreciation on equipment. Apr. 1 Cash 3,000 Accumulated Depreciation—Equipment 37,000 Equipment 40,000 To record sale of equipment. Dec. 31 Depreciation Expense—Office Equipment 67,500 Accumulated Depreciation—Office Equipment 67,500 To record depreciation on office equipment. Calculations: Jan. 1 – Exchange of office equipment Market value of assets received $ 135,000 Less: Book value of asset exchanged Horngren’s Accounting   10/e    Solutions Manual 10-52
Cost $ 140,000 Less: Accumulated depreciation (80,000) $ 60,000 Cash paid 70,000 130,000 Gain or (Loss) $ 5,000 Horngren’s Accounting   10/e    Solutions Manual 10-53
P10-41B, cont. Apr. 1 – Sale of equipment Straight-line depreciation = (Cost − Residual value) / Useful life × (Number of Months / 12) = ($40,000 ̶ $0) / 5 years × 3/12 = $2,000 per partial year (2014) Market value of assets received $ 3,000 Less: Book value of asset disposed of Cost $ 40,000 Less: Accumulated Depreciation ($35,000 + $2,000) (37,000) 3,000 Gain or (Loss) $ 0 Dec. 31 – Depreciation on office equipment Double-declining-balance depreciation = (Cost – Accumulated depreciation) × 2 × (1 / Useful life) = ($135,000 – $0) × 2 × (1/4 years) = $67,500 Horngren’s Accounting   10/e    Solutions Manual 10-54
Continuing Problem P10-42 Requirement 1 Depreciation on computer Straight-line depreciation = (Cost − Residual value) / Useful life × (Number of Months / 12) = ($1,800 ̶ $0) / 5 years × 1/12 = $30 per month Depreciation on office furniture Double-declining-balance depreciation = (Cost – Accumulated depreciation) × 2 × (1 / Useful life) = ($4,200 ̶ $0) × 2 × (1/5years) × 1/12 = $140 Requirement 2 Date Accounts and Explanation Debit Credit Dec. 31 Depreciation Expense—Computer 30 Accumulated Depreciation—Computer 30 To record depreciation on computer.

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