Class discussion on depreciations policies Cost Salvage life S/L Date purchased 10000 0 10 years 1000 per year 5/15/2006 1000 8/12 mos. 666.6667 Policy: Depreciate from the beginning of the month of purchase 1000 7/12 mos. 583.3333 Policy: Depreciate
Fellingham Corporation purchased equipment on January 1, 2014, for $276,000. The company estimated
the equipment would have a useful life of 10 years with a $16,000 residual value. Fellingham uses the
straight-line depreciation method. Early in 2016, Fell
On January 1, 2016, Dreamworld Co. began construction of a new warehouse. The building was finished
and ready for use on September 30, 2017. Expenditures on the project were as follows:
January 1, 2016
September 1, 2016
December 31, 2016
March 31, 2017
Horton Stores exchanged land and cash of $5,900 for similar land. The book value and the fair value of
the land were $88,200 and $101,300, respectively.
Assuming that the exchange lacks commercial substance, Horton would record land-new and a gain/
Archie Co. purchased a framing machine for $45,000 on January 1, 2016. The machine is expected
to have a four-year life, with a residual value of $5,000 at the end of four years.
Using the sum-of-the years'-digits method, depreciation for 2017 and book va
Below is information relative to an exchange of similar assets by Grand Forks Corp. Assume the
exchange has commercial substance.
In Case A, Grand
Asset C3PO has a depreciable base of $16.5 million and a service life of 10 years. What would the
accumulated depreciation be at the end of year five under the sum-of-the-years' digits method?
None of these answer choices are correct.
1. To record the acquisition of land and building.
Land (determined below) .
Building (determined below) .
Percent of Total
To expense R&D costs incorrectly capitalized.
Research and development expense (below) . 3,180,000
Research and development expenditures:
Basic research to develop the technology
Engineering design work
Development of a pr
[10 + 9 + 8 x ($1.5 .3) million] = $589,091
Depreciation to date, SYD (20132015)
Undepreciated cost as of 1/1/16
Less residual value
Simpson and Homer Corporation acquired an office building on three acres of land for a lump-sum
price of $2,400,000. The building was completely furnished. According to independent appraisals,
the fair values were $1,300,000, $780,000, and $520,000 for th
Jung Inc. owns a patent for which it paid $77 million. At the end of 2016, it had accumulated amortization
on the patent of $15 million. Due to adverse economic conditions, Jung's management determined that it
should assess whether an impairment loss shou
Cost A/D BV FMV Cash Paid
Susquehanna and Shawnee Not Related FASB 153 Susquehanna Shawnee $160,000 Cost $160,000 -$50,000 A/D -$75,000 $110,000 BV $85,000 $92,000 FMV $100,000 $8,000 Cash Received $8,000 Using the FMV of the new asset $100,000 Got
Owners Equity (OE)
OE is the third of three types of balance sheet
account. We discuss corporate OE only here.
The main types of corporate OE are: (1)
contributed capital (permanent capital), and (2)
OE accounts for two of the three
On January 1, 2016, Kendall Inc. began construction of an automated cattle feeder system. The
system was finished and ready for use on September 30, 2017. Expenditures on the project were as
January 1, 2016
September 1, 2016
On June 1, 2015, the Crocus Company began construction of a new manufacturing plant. The plant
was completed on October 31, 2016. Expenditures on the project were as follows ($ in millions):
July 1, 2015
October 1, 2015
February 1, 2016
April 1, 2016