Depreciation Methods
Winsey Company purchased equipment on January 2, 2016, for $700,000. The equipment has the following characteristics:
| Estimated service life | 16 years, 80,000 hours, or 750,000 units of output |
| Estimated residual value | $50,000 |
During 2016 and 2017, the company used the machine for 4,500 and 5,500 hours, respectively, and produced 40,000 and 60,000 units, respectively.
| 2016 | 2017 | |
| Straight-line method | $ | $ |
| Activity method (hours worked) | $ | $ |
| Activity method (units of output) | $ | $ |
| Sum-of-the-years'-digits method | $ | $ |
| Double-declining-balance method | $ | $ |
| 150%-declining-balance method | $ | $ |
In: Accounting
The following information was available from the inventory records of Anderson Corp. for January:
Units Unit Cost
Balance at March 1 3,100 9.75
Purchases:
03/05/2016
2,000 10.50
03/25/2015
2,500 10.70
Sales:
03/08/2016
-2,750
03/30/2016
-3,500
Balance at March 31 1,350
Assuming that Anderson maintains perpetual inventory records, what should be the inventory at March 31, using the moving-average inventory method, rounded to the nearest dollar?
Select one:
A. $13,851
B. $13,928
C. $14,016
D. $14,224
In: Accounting
On March 1, 2015, a company bought equipment for 900.000. The estimated salvage value of the equipment after 5 years of useful life is 50.000. The estimated productive capacity of the equipment during its useful life is 1.000.000 units.
1) Calculate the depreciation for the year 2015, using the straight-line method.
2) If 180.000 units are produced in the year 2015 and 240.000 are produced in the year 2016, what is the book value of the equipment on December 31, 2016, using the activity method?
3) If the declining-balance depreciation method is used, what is the accumulated depreciation on December 31, 2016?
In: Accounting
3. Below is financial information extracted from financial statements for KHLED Inc. for 2016.
|
items |
Amounts in thousands of Saudi Riyal |
|
Net in come |
200 |
|
Depreciation expense |
15 |
|
Increase in accounts receivable |
35 |
|
Decrease in inventory |
30 |
|
Increase in accounts payable |
20 |
|
Proceeds from sale of land |
50 |
|
Purchases of equipment |
20 |
|
Proceeds from issuance of common stock |
40 |
|
Cash dividends |
5 |
|
Cash, January 1, 2016 |
100 |
Required: Prepare cash flow statement for KHALED Inc. for 2016 using the indirect method.
The answer should not be photo or handwriting.
In: Accounting
| During 2015 Cambridge Co. started a construction job with a contract price of $2,000,000. | |||||
| The job was completed in 2017. The following information is available: | |||||
| 2015 | 2016 | 2017 | |||
| Costs incurred to date | 500,000 | 900,000 | 1,100,000 | ||
| Estimated costs to complete | 600,000 | 200,000 | 0 | ||
| Billings to date | 500,000 | 1,400,000 | 2,000,000 | ||
| Collections to date | 450,000 | 1,300,000 | 1,800,000 | ||
| Instructions: | |||||
| (a) Compute the amount of gross profit to be recognized each year assuming the percentage of | |||||
| completion method is used. | |||||
| (b) ****EXTRA CREDIT - Prepare all necessary journal entries for 2016. | |||||
| 2015 | 2016 | 2017 | |||
| 2,000,000 | 2,000,000 | 2,000,000 | |||
In: Accounting
On January 1, 2016, Calvert Company issues 9%, $100,000 face value bonds for $103,673.08, a price to yield 7%. The bonds mature on December 31, 2017. Interest is paid semiannually on June 30 and December 31.
Required:
| 1. | Prepare a bond interest expense and premium amortization schedule using the straight-line method. |
| 2. | Prepare a bond interest expense and premium amortization schedule using the effective interest method. |
| 3. | Prepare the journal entries to record the interest payments on June 30, 2016, and December 31, 2016, using both methods. |
In: Accounting
In: Finance
Broussard Skateboard's sales are expected to increase by 15% from $8.0 million in 2016 to $9.20 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 4%. Assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year?
In: Finance
Second Chance Inc. purchased a lot with an old warehouse on the premises for $420,000 on
January 1, 2016. The company immediately demolished the building and cleared the site at a
cost of $150,000. Castle then commenced construction of a new warehouse for their own use on
March 1, 2016. The warehouse took 14 months to construct and was ready to be used on April
30, 2017. Expenditures for the construction were as follows:
March 1, 2016 deposit $400,000
May 30, 2016 $600,000
December 31, 2016 $800,000
February 1, 2017 $300,000
April 1, 2017 $400,000
The Company uses the specific interest method of computing capitalized interest and had the
following indebtedness during the period of construction:
Loan #1 borrowed $3,000,000 March 31, 2014 at a rate of 6%, due September 30, 2017
Loan #2 borrowed $2,000,000 January 31, 2016 to build the warehouse at a rate of 7%, due
January 31, 2026
When the warehouse is placed in service, it will be depreciated on a straight line basis over 30
years with zero assumed salvage value.
1) What was Castle’s reported interest expense after capitalization of interest for 2017
(rounded)?
A) $225,000.
B) $270,000.
C) $275,000.
D) $320,000.
2) What was the total cost in construction of the building (rounded)?
A) $2,500,000.
B) $2,600,000.
C) $2,700,000.
D) $3,100,000.
3) The company sold the land and the warehouse on April 30, 2029 for cash proceeds of
$2,000,000. What was the overall gain or (loss), rounded?
A) ($87,000).
B) $441,000.
C) $187,000.
D) ($128,000).
In: Accounting
Question 3
Prints Galore Ltd., a Canadian company, acquired 100% of
Sculptures Ltd. for FC 300,000 on January 1, 2014. Prints Galore’s
functional currency is the Canadian dollar and Sculpture’s
functional currency is the FC. Selected exchange rates are
presented below:
January 1, 2014 FC1 = $1.6993 CAD
December 31, 2015 FC1 = $1.7182 CAD
December 31, 2016 FC1 = $1.7233 CAD
Assume that the average rate for 2014, 2015, and 2016 is FC 1 =
$1.7201 CAD.
Required:
At the time of acquisition, the fair value of Sculpture’s net assets was FC 200,000. There has been no impairment of goodwill.
Calculate the amount of goodwill that should be presented on
Prints Galore’s December 31, 2016 consolidated statement of
financial position.
Calculate the amount of exchange gain/loss, if any, that should
be reported on Prints Galore’s 2016 consolidated statement of
income under other comprehensive income.
Assume that at the time of acquisition, the fair value of Sculpture’s net assets is FC 300,000. All of the net assets equaled their carrying value with the exception of some machinery which exceeded its carrying value by FC 100,000. The machinery has a remaining useful life of 5 years. Both Prints and Sculpture use straight-line amortization.
At the end of 2016, what amount, if any, of the acquisition differential should be added to the net book value of the equipment?
Calculate the amortization expense, if any, related to the acquisition differential that should be included in Prints’ consolidated statement of comprehensive income for 2016.
Calculate the ending balance of the cumulative exchange gain, cumulative OCI.
In: Finance