Depreciation The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset. Intangibles assets The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill , patents, copyrights. Impairment Loss It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment. To compute : The Book Value (B V) of the Plant and Equipment (P & E) and Patent at the end of 2018.

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Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $7,000, direct labor of $3,400, and applied overhead of $2,890. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on credit) for $26,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of July. Custom Cabinetry incurs the following costs during July. Job 120 Direct materials used Direct labor used $ 2,300 3,400 Job 121 $ 7,100 4,700 Job 122 $ 2,600 3,700 1. Prepare journal entries for the following July transactions and events a through e. a. Direct materials used. b. Direct labor used. c. Overhead applied. d. Sale of Job 120. e. Cost of goods sold for Job 120. Hint. Job 120 has costs from June and July. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (There were no jobs in Finished Goods Inventory at June…

Answer 1

Question

Chapter 11, Problem 11.12P

(1)

To determine

Depreciation

The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset.

Intangibles assets

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill, patents, copyrights.

Impairment Loss

It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment.

To compute: The Book Value (B V) of the Plant and Equipment (P & E) and Patent at the end of 2018.

(2)

To determine

To explain: when should the plant and equipment and the patent be tested for impairment.

(3)

To determine

To explain: When should goodwill should be tested for impairment.

(4)

To determine

The amount of any impairment loss to be recorded, if any, for the three assets.

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Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $7,000, direct labor of $3,400, and applied overhead of $2,890. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on credit) for $26,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of July. Custom Cabinetry incurs the following costs during July. Job 120 Direct materials used Direct labor used $ 2,300 3,400 Job 121 $ 7,100 4,700 Job 122 $ 2,600 3,700 1. Prepare journal entries for the following July transactions and events a through e. a. Direct materials used. b. Direct labor used. c. Overhead applied. d. Sale of Job 120. e. Cost of goods sold for Job 120. Hint. Job 120 has costs from June and July. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (There were no jobs in Finished Goods Inventory at June…

In 2014, LL Bean sold 450,000 pairs of boots. At one point in 2014, it had a back order of 100,000. In 2015, LL Bean expects to sell 500,000 pairs of boots. As of late November 2015, it has a back order of 50,000.Question: When would LL Bean see sales revenue from the sale of its back order on the boots?

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Answer 2

Question

Chapter 11, Problem 11.12P

(1)

To determine

Depreciation

The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset.

Intangibles assets

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill, patents, copyrights.

Impairment Loss

It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment.

To compute: The Book Value (B V) of the Plant and Equipment (P & E) and Patent at the end of 2018.

(2)

To determine

To explain: when should the plant and equipment and the patent be tested for impairment.

(3)

To determine

To explain: When should goodwill should be tested for impairment.

(4)

To determine

The amount of any impairment loss to be recorded, if any, for the three assets.

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Answer 3

Question

Chapter 11, Problem 11.12P

(1)

To determine

Depreciation

The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset.

Intangibles assets

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill, patents, copyrights.

Impairment Loss

It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment.

To compute: The Book Value (B V) of the Plant and Equipment (P & E) and Patent at the end of 2018.

(2)

To determine

To explain: when should the plant and equipment and the patent be tested for impairment.

(3)

To determine

To explain: When should goodwill should be tested for impairment.

(4)

To determine

The amount of any impairment loss to be recorded, if any, for the three assets.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 11.12P

(1)

To determine

Depreciation

The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset.

Intangibles assets

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill, patents, copyrights.

Impairment Loss

It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment.

To compute: The Book Value (B V) of the Plant and Equipment (P & E) and Patent at the end of 2018.

(2)

To determine

To explain: when should the plant and equipment and the patent be tested for impairment.

(3)

To determine

To explain: When should goodwill should be tested for impairment.

(4)

To determine

The amount of any impairment loss to be recorded, if any, for the three assets.

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Answer 5

Chapter 11, Problem 11.12P

(1)

To determine

Depreciation

The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset.

Intangibles assets

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill, patents, copyrights.

Impairment Loss

It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment.

To compute: The Book Value (B V) of the Plant and Equipment (P & E) and Patent at the end of 2018.

(2)

To determine

To explain: when should the plant and equipment and the patent be tested for impairment.

(3)

To determine

To explain: When should goodwill should be tested for impairment.

(4)

To determine

The amount of any impairment loss to be recorded, if any, for the three assets.

Answer 6

Chapter 11, Problem 11.12P

(1)

To determine

Depreciation

The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset.

Intangibles assets

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill, patents, copyrights.

Impairment Loss

It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment.

To compute: The Book Value (B V) of the Plant and Equipment (P & E) and Patent at the end of 2018.

Answer 7

Chapter 11, Problem 11.12P

(1)

To determine

Depreciation

The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset.

Intangibles assets

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill, patents, copyrights.

Impairment Loss

It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment.

To compute: The Book Value (B V) of the Plant and Equipment (P & E) and Patent at the end of 2018.

Answer 8

(2)

To determine

To explain: when should the plant and equipment and the patent be tested for impairment.

Answer 9

(2)

To determine

To explain: when should the plant and equipment and the patent be tested for impairment.

Answer 10

(3)

To determine

To explain: When should goodwill should be tested for impairment.

Answer 11

(3)

To determine

To explain: When should goodwill should be tested for impairment.

Answer 12

(4)

To determine

The amount of any impairment loss to be recorded, if any, for the three assets.

Answer 13

(4)

To determine

The amount of any impairment loss to be recorded, if any, for the three assets.

Answer 14

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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 the straight-line method used to calculate depreciation and amortization on plant and equipment and patents.

To explain: when should the plant and equipment and the patent be tested for impairment.

To explain: When should goodwill should be tested for impairment.

The amount of any impairment loss to be recorded, if any, for the three assets.

Chapter 11 Solutions