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Chapter 25 / Exercise 6
College Accounting, Chapters 1-27
Heintz/Parry
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Check Your Progress Exercise- 1Check Your Progress Exercise- 11.1.Ford Company apportions depreciation expense on equipment on the basis of theFord Company apportions depreciation expense on equipment on the basis of thecombined total of average cost of the equipment and average cost of the merchandisecombined total of average cost of the equipment and average cost of the merchandiseinventories.Depreciation expense on equipment amounted to Birr 110,000 andinventories.Depreciation expense on equipment amounted to Birr 110,000 andproperty tax expense amounted to Birr 26,000 for the year.Determine theproperty tax expense amounted to Birr 26,000 for the year.Determine theapportionment of the Depreciation Expense and the Property tax Expense, based onapportionment of the Depreciation Expense and the Property tax Expense, based onthe following data:the following data:Average costAverage costDepartmentsDepartmentsEquipmentEquipmentInventoriesInventoriesServiceServiceR…………………………………….Birr 120,000R…………………………………….Birr 120,000M………………………………………….60,000M………………………………………….60,000122
SalesSales100……………………………………….240,000………………Birr 160,000100……………………………………….240,000………………Birr 160,000200……………………………………….420,000……………………360,000200……………………………………….420,000……………………360,000300……………………………………….300……………………………………….360,000360,000…………………………………………280,000280,000TotalTotal…………………………………… ..Birr.…………………………………… ..Birr.1, 200,0001, 200,000……………...Birr.……………...Birr.800,000800,0002.2.What are the uses of accounting reports by departments?What are the uses of accounting reports by departments?10.3DEPARTMENTAL MARGIN APPROACH TO INCOME REPORTING10.3DEPARTMENTAL MARGIN APPROACH TO INCOME REPORTINGNot all accountants agree as to the merits of the type of departmental analysis discussed in theNot all accountants agree as to the merits of the type of departmental analysis discussed in thepreceding section (income statement by operating income).Many cautions against completepreceding section (income statement by operating income).Many cautions against completereliance on such departmental income statements on the grounds that the use of arbitraryreliance on such departmental income statements on the grounds that the use of arbitrarybased in allocating operating expenses is likely to yield in correct amounts of departmentalbased in allocating operating expenses is likely to yield in correct amounts of departmentaloperating income.In addition, objection may be made to the reporting of operating incomeoperating income.In addition, objection may be made to the reporting of operating incomeby departments on the grounds that departments are not independent operating units, butby departments on the grounds that departments are not independent operating units, butsegments of a single business enterprise, and that therefore no single department of a businesssegments of a single business enterprise, and that therefore no single department of a businesscan by itself earn an income.For these reasons, the format of income statements ofcan by itself earn an income.For these reasons, the format of income statements ofsegmented businesses may follow a somewhat different format than the one illustratedsegmented businesses may follow a somewhat different format than the one illustratedpreviously.

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Term
Spring
Professor
Dr. Laximikantam
Tags
Depreciation, retail price, Br
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
College Accounting, Chapters 1-27
The document you are viewing contains questions related to this textbook.
Chapter 25 / Exercise 6
College Accounting, Chapters 1-27
Heintz/Parry
Expert Verified

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