Accounting

Charlie Parker

Professor Wilson

Assignment Week 7

AC550

Chapter 11: E 11-4, E 11-8, E 11-9, E 11-11, E 11-17, E 11-24, P 11-5

E11-4

(a) $315,000 – $15,000 = $300,000; $300,000 ÷ 10 yrs. = $30,000

(b) $300,000 ÷ 240,000 units = $1.25; 25,500 units X $1.25 = $31,875

(c) $300,000 ÷ 25,000 hours = $12.00 per hr.; 2,650 hrs. X $12.00 = $31,800n(n + 1) 10(11)

(d) 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 55 OR

Total for 2008 $50,909

(e) $315,000 X 20% X 1/3 = $21,000

[$315,000 – ($315,000 X 20%)] X 20% X 2/3 = 33,600

Total for 2008 $54,600

E11-8

Old Machine

June 1, 2010 Purchase $31,000

Freight 200

Installation 500

Total cost $31,700

Annual depreciation charge: ($31,700 – $2,500) ÷ 10 = $2,920

On June 1, 2011, debit the old machine for $1,980; the revised total cost

is $33,680 ($31,700 + $1,980); thus the revised annual depreciation

charge is: ($33,680 – $2,500 – $2,920) ÷ 9 = $3,140.

Book value, old machine, June 1, 2011:

[$33,680 – $2,920 – ($3,140 X 3)] = $21,340

Fair market value 20,000

Loss on exchange 1,340

Cost of removal 75

Total loss $ 1,415

New Machine

Basis of new machine Cash paid ($35,000 – $20,000) $15,000

Fair market value of old machine 20,000

Installation cost 1,500

Total cost of new machine $36,500

Depreciation for the year beginning June 1, 2014 = ($36,500 – $4,000) ÷ 10 =$3,250.

E11-9

(a)

Asset

Cost

Cost Estimated Depri Esti Depri per yr

A $ 40,500 $ 5,500 $ 35,000 10 $ 3,500

B 33,600 4,800 28,800 9 3,200

C 36,000 3,600 32, 400 9 3,600

D 19,000 1,500 17,500 7 2,500

E 23,500 2,500 21,000 6 3,500

$152,600 $17,900 $134,700 $16,300

Composite life = $134,700 ÷ $16,300, or 8.26 years

Composite rate = $16,300 ÷ $152,600, or approximately 10.7%

(b) Depreciation...