- •108. On July 1, 2006, Jekel & Hyde Inc. Purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below:
- •Required:
- •Indicate the accounts that would be affected by the above transactions and the resulting balance in each account. Apply the interest on the construction loan to the cost of the building only.
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •In its 2004 annual report to shareholders, Boston Beer Co. Disclosed the following footnote:
- •E. Property, Plant and Equipment
- •128. Use a t- account to show the balances and changes during 2004 in Boston Beer's: Property, Plant and Equipment account and its Accumulated depreciation—Property, Plant & equipment account.
- •Required:
- •130. Use a t- account to show the balances and changes during 2004 in Plank Breweries:
- •Note 4 Property, Plant and Equipment
- •100. A summary of Klugman Company's December 31, 2006, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
- •101. A summary of London Fashion's December 31, 2006, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
- •114. Is there any evidence in Winchester's disclosures above that are consistent with earnings management?
- •Required:
- •121. Is there any evidence in hp's disclosures above that are consistent with earnings management?
- •100. Required:
- •101. Required:
- •104. Required:
- •105. Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •127. In its 2004 annual report to shareholders, Martin Marietta Materials, Inc. Included the following in its financial statement footnotes:
- •Note e: property, plant and equipment, net
- •In another footnote, the company reported:
Required:
Compute depreciation expense for 2006 and 2007.
Answer:
|
Cost |
|
$45,000 |
|
Residual value |
|
3,000 |
|
Depreciable base |
|
42,000 |
|
Estimated life (years) |
|
÷ 8 |
|
Annual depreciation charge (2004 and 2005) |
|
$ 5,250 |
|
|
|
|
|
Cost |
|
$45,000 |
|
Depreciation: 2004 |
$5,250 |
|
|
2005 |
5,250 |
10,500 |
|
Book value, Dec. 31, 2005 |
|
34,500 |
|
Revised residual value |
|
2,000 |
|
Remaining depreciable base |
|
32,500 |
|
Remaining life (years) |
|
÷ 4 |
|
Annual depreciation expense 2006 and 2007 |
|
$8,125 |
|
|
|
|
Learning Objective: 5 Level of Learning: 3
112. Eckland Manufacturing Co. purchased equipment on January 1, 2004, at a cost of $90,000. Depreciation for 2004 and 2005 was based on an estimated eight-year life and $2,000 estimated residual value. In 2006, Eckland revised its estimate and now believes the equipment will have a total service life of only six years.
Required:
Compute depreciation expense for 2006 and 2007.
Answer:
|
Cost |
|
$90,000 |
|
Residual value |
|
2,000 |
|
Depreciable base |
|
88,000 |
|
Estimated life (years) |
|
÷ 8 |
|
Annual depreciation charge (2004 and 2005) |
|
$11,000 |
|
|
|
|
|
|
|
|
|
Cost |
|
$90,000 |
|
Depreciation: 2004 |
$11,000 |
|
|
2005 |
11,000 |
22,000 |
|
Book value, Dec. 31, 2005 |
|
68,000 |
|
Residual value |
|
2,000 |
|
Remaining depreciable base |
|
66,000 |
|
Remaining life (years) |
|
÷ 4 |
|
Annual depreciation expense 2006 and 2007 |
|
$16,500 |
Learning Objective: 5 Level of Learning: 3
113. Zvinakis Mining Company paid $200,000 for the rights to mine lead in Southeast Missouri. The cost to drill and erect a mine shaft was $2,400,000 and equipment to process the lead ore before shipment to the smelter was $1,800,000. The mine is expected to yield 2,000,000 tons of ore during the 5 years it is expected to be operating. The equipment is salvageable and is expected to be worth $150,000 when mining is concluded. The mine started operations on April 30, 2006. In 2006, 300,000 tons of ore were extracted and in 2007, 700,000 tons were mined.