Methods of Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life. The four methods of depreciation are: Straight-line method Sum-of- the-years’ digits method Double-declining balance method Units-of-production method To discuss: The manner in which a company manages earnings by changing its depreciation method.

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Answer 1

Question

Chapter 11, Problem 11.11BYP

Requirement – 1

To determine

Methods of Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The four methods of depreciation are:

Straight-line method

Sum-of- the-years’ digits method

Double-declining balance method

Units-of-production method

To discuss: The manner in which a company manages earnings by changing its depreciation method.

Requirement – 2

To determine

To discuss: The manner in which a company manages earnings by changing the estimated useful lives of depreciable assets.

Requirement – 3

To determine

To discuss: The manner in which the asset impairment losses could be used to manage earnings.

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On January 1, 2024, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright received a note requiring payment of $532,000 by Elmira on December 31, 2026. The effective interest rate is 8%. Note: Use appropriate factor(s) from the tables provided. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: How much sales revenue would Wright recognize on January 1, 2024, for this transaction? Prepare journal entries to record the sale of merchandise on January 1, 2024 (omit any entry that might be required for the cost of the goods sold), the December 31, 2024, interest accrual, the December 31, 2025, interest accrual, and receipt of payment of the note on December 31, 2026.

Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $28,000 at the beginning of 2024. No previously written-off accounts receivable were reinstated during 2024. At 12/31/2024, gross accounts receivable totaled $466,700, and prior to recording the adjusting entry to recognize bad debts expense for 2024, the allowance for uncollectible accounts had a debit balance of 51,300. Required: Assume Johnson made no other adjustment of the allowance for uncollectible accounts during 2024. Determine the amount of accounts receivable written off during 2024. If Johnson instead used the direct write-off method, what would bad debt expense be for 2024?

Answer 2

Question

Chapter 11, Problem 11.11BYP

Requirement – 1

To determine

Methods of Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The four methods of depreciation are:

Straight-line method

Sum-of- the-years’ digits method

Double-declining balance method

Units-of-production method

To discuss: The manner in which a company manages earnings by changing its depreciation method.

Requirement – 2

To determine

To discuss: The manner in which a company manages earnings by changing the estimated useful lives of depreciable assets.

Requirement – 3

To determine

To discuss: The manner in which the asset impairment losses could be used to manage earnings.

Expert Solution & Answer

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Answer 3

Question

Chapter 11, Problem 11.11BYP

Requirement – 1

To determine

Methods of Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The four methods of depreciation are:

Straight-line method

Sum-of- the-years’ digits method

Double-declining balance method

Units-of-production method

To discuss: The manner in which a company manages earnings by changing its depreciation method.

Requirement – 2

To determine

To discuss: The manner in which a company manages earnings by changing the estimated useful lives of depreciable assets.

Requirement – 3

To determine

To discuss: The manner in which the asset impairment losses could be used to manage earnings.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 11.11BYP

Requirement – 1

To determine

Methods of Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The four methods of depreciation are:

Straight-line method

Sum-of- the-years’ digits method

Double-declining balance method

Units-of-production method

To discuss: The manner in which a company manages earnings by changing its depreciation method.

Requirement – 2

To determine

To discuss: The manner in which a company manages earnings by changing the estimated useful lives of depreciable assets.

Requirement – 3

To determine

To discuss: The manner in which the asset impairment losses could be used to manage earnings.

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Answer 5

Chapter 11, Problem 11.11BYP

Requirement – 1

To determine

Methods of Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The four methods of depreciation are:

Straight-line method

Sum-of- the-years’ digits method

Double-declining balance method

Units-of-production method

To discuss: The manner in which a company manages earnings by changing its depreciation method.

Requirement – 2

To determine

To discuss: The manner in which a company manages earnings by changing the estimated useful lives of depreciable assets.

Requirement – 3

To determine

To discuss: The manner in which the asset impairment losses could be used to manage earnings.

Answer 6

Chapter 11, Problem 11.11BYP

Requirement – 1

To determine

Methods of Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The four methods of depreciation are:

Straight-line method

Sum-of- the-years’ digits method

Double-declining balance method

Units-of-production method

To discuss: The manner in which a company manages earnings by changing its depreciation method.

Answer 7

Chapter 11, Problem 11.11BYP

Requirement – 1

To determine

Methods of Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The four methods of depreciation are:

Straight-line method

Sum-of- the-years’ digits method

Double-declining balance method

Units-of-production method

To discuss: The manner in which a company manages earnings by changing its depreciation method.

Answer 8

Requirement – 2

To determine

To discuss: The manner in which a company manages earnings by changing the estimated useful lives of depreciable assets.

Answer 9

Requirement – 2

To determine

To discuss: The manner in which a company manages earnings by changing the estimated useful lives of depreciable assets.

Answer 10

Requirement – 3

To determine

To discuss: The manner in which the asset impairment losses could be used to manage earnings.

Answer 11

Requirement – 3

To determine

To discuss: The manner in which the asset impairment losses could be used to manage earnings.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11 - Prob. 11.1Q Ch. 11 - Depreciation is a process of cost allocation, not...Ch. 11 - Identify and define the three characteristics of...Ch. 11 - Discuss the factors that influence the estimation...Ch. 11 - What is meant by depreciable base? How is it...Ch. 11 - Prob. 11.6Q Ch. 11 - Prob. 11.7Q Ch. 11 - Why are time-based depreciation methods used more...Ch. 11 - Prob. 11.9Q Ch. 11 - Prob. 11.10Q

Solution Summary: The author explains that depreciation is a method of distributing the cost of fixed assets over its estimated useful life.

To discuss: The manner in which a company manages earnings by changing the estimated useful lives of depreciable assets.

To discuss: The manner in which the asset impairment losses could be used to manage earnings.

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Chapter 11 Solutions