Physical Measurement Method: Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume. Formula to allocate joint cost as per physical measure method: Cost allocated to joint product = Quantity of product Total quantity of production × Total joint cost Net Realizable Value (NRV) Method: NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products. Formula to allocate joint cost as per NRV method: Cost allocated to joint product = NRV of product Total NRV of production × Total joint cost Where, NRV = Sales value − Cost of further process or sell To compute: Allocation of joint cost as per physical measure method:

Question

Presented below is the trial balance of Sandhill Corporation at December 31, 2020. Debit Credit Cash $289,100 Sales Revenue $11,907,000 Debt Investments (trading) (at cost, $218,000) 225,400 Cost of Goods Sold 7,056,000 Debt Investments (long-term) 439,040 Equity Investments (long-term) 407,680 Notes Payable (short-term) 132,300 Accounts Payable 668,360 Selling Expenses 2,940,000 Investment Revenue 93,100 Land 382,200 Buildings 1,528,800 Dividends Payable 199,920 Accrued Liabilities 141,120 Accounts Receivable 638,960 Accumulated Depreciation–Buildings 223,440 Allowance for Doubtful Accounts 37,240 Administrative Expenses 1,323,000 Interest Expense 310,660 Inventory 877,100 Gain 117,600 Notes Payable (long-term) 1,323,000 Equipment 882,000 Bonds Payable 1,470,000 Accumulated Depreciation–Equipment 88,200 Franchises 235,200 Common Stock ($5 par) 1,470,000 Treasury Stock 281,260 Patents 287,140 Retained Earnings 114,660 Paid-in Capital in Excess of Par 117,600 Totals $18,103,540 Debit…

Answer 1

Question

Chapter 16, Problem 16.26E

1. a.

To determine

Physical Measurement Method:

Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume.

Formula to allocate joint cost as per physical measure method:

Cost allocated to joint product=Quantity of productTotal quantity of production×Total joint cost

Net Realizable Value (NRV) Method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Formula to allocate joint cost as per NRV method:

Cost allocated to joint product=NRV of productTotal NRV of production×Total joint cost

Where,

NRV=Sales value−Cost of further process or sell

To compute: Allocation of joint cost as per physical measure method:

1. b.

To determine

To compute: Allocation of joint cost as per NRV method.

2.

To determine

To compute: Operating income as per Physical measure method and NRV method.

3.

To determine

To identify: Pros and cons of physical measure method and NRV method.

4.

To determine

To prepare: Letter to taxation authorities.

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Presented below is the trial balance of Sandhill Corporation at December 31, 2020. Debit Credit Cash $289,100 Sales Revenue $11,907,000 Debt Investments (trading) (at cost, $218,000) 225,400 Cost of Goods Sold 7,056,000 Debt Investments (long-term) 439,040 Equity Investments (long-term) 407,680 Notes Payable (short-term) 132,300 Accounts Payable 668,360 Selling Expenses 2,940,000 Investment Revenue 93,100 Land 382,200 Buildings 1,528,800 Dividends Payable 199,920 Accrued Liabilities 141,120 Accounts Receivable 638,960 Accumulated Depreciation–Buildings 223,440 Allowance for Doubtful Accounts 37,240 Administrative Expenses 1,323,000 Interest Expense 310,660 Inventory 877,100 Gain 117,600 Notes Payable (long-term) 1,323,000 Equipment 882,000 Bonds Payable 1,470,000 Accumulated Depreciation–Equipment 88,200 Franchises 235,200 Common Stock ($5 par) 1,470,000 Treasury Stock 281,260 Patents 287,140 Retained Earnings 114,660 Paid-in Capital in Excess of Par 117,600 Totals $18,103,540 Debit…

Aram's taxable income before considering capital gains and losses is $85,000. Determine Aram's taxable income and how much of the income will be taxed at ordinary rates in each of the following alternative scenarios (assume Aram files as a single taxpayer). Aram sold a capital asset that he owned for more than one year for a $3,750 gain, a capital asset that he owned for more than one year for a $550 loss, a capital asset that he owned for six months for a $450 gain, and a capital asset he owned for two months for a $2,400 loss. What is taxable income and incomed taxed at ordinary rates?

Marc and Mikkel are married and file a joint tax return. Marc and Mikkel earned salaries this year of $64,200 and $13,200, respectively. In addition to their salaries, they received interest of $354 from municipal bonds and $600 from corporate bonds. Marc contributed $2,600 to a traditional individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,600 (under a divorce decree effective June 1, 2017). Marc and Mikkel have a 10-year-old adopted son, Mason, who lived with them throughout the entire year. Thus, Marc and Mikkel are allowed to claim a $2,000 child tax credit for Mason. Marc and Mikkel paid $6,200 of expenditures that qualify as itemized deductions, and they had a total of $2,596 in federal income taxes withheld from their paychecks during the year.What is the total amount of Marc and Mikkel's deductions from AGI?

Answer 2

Question

Chapter 16, Problem 16.26E

1. a.

To determine

Physical Measurement Method:

Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume.

Formula to allocate joint cost as per physical measure method:

Cost allocated to joint product=Quantity of productTotal quantity of production×Total joint cost

Net Realizable Value (NRV) Method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Formula to allocate joint cost as per NRV method:

Cost allocated to joint product=NRV of productTotal NRV of production×Total joint cost

Where,

NRV=Sales value−Cost of further process or sell

To compute: Allocation of joint cost as per physical measure method:

1. b.

To determine

To compute: Allocation of joint cost as per NRV method.

2.

To determine

To compute: Operating income as per Physical measure method and NRV method.

3.

To determine

To identify: Pros and cons of physical measure method and NRV method.

4.

To determine

To prepare: Letter to taxation authorities.

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Answer 3

Question

Chapter 16, Problem 16.26E

1. a.

To determine

Physical Measurement Method:

Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume.

Formula to allocate joint cost as per physical measure method:

Cost allocated to joint product=Quantity of productTotal quantity of production×Total joint cost

Net Realizable Value (NRV) Method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Formula to allocate joint cost as per NRV method:

Cost allocated to joint product=NRV of productTotal NRV of production×Total joint cost

Where,

NRV=Sales value−Cost of further process or sell

To compute: Allocation of joint cost as per physical measure method:

1. b.

To determine

To compute: Allocation of joint cost as per NRV method.

2.

To determine

To compute: Operating income as per Physical measure method and NRV method.

3.

To determine

To identify: Pros and cons of physical measure method and NRV method.

4.

To determine

To prepare: Letter to taxation authorities.

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Answer 4

Question

Chapter 16, Problem 16.26E

1. a.

To determine

Physical Measurement Method:

Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume.

Formula to allocate joint cost as per physical measure method:

Cost allocated to joint product=Quantity of productTotal quantity of production×Total joint cost

Net Realizable Value (NRV) Method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Formula to allocate joint cost as per NRV method:

Cost allocated to joint product=NRV of productTotal NRV of production×Total joint cost

Where,

NRV=Sales value−Cost of further process or sell

To compute: Allocation of joint cost as per physical measure method:

1. b.

To determine

To compute: Allocation of joint cost as per NRV method.

2.

To determine

To compute: Operating income as per Physical measure method and NRV method.

3.

To determine

To identify: Pros and cons of physical measure method and NRV method.

4.

To determine

To prepare: Letter to taxation authorities.

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Answer 5

Chapter 16, Problem 16.26E

1. a.

To determine

Physical Measurement Method:

Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume.

Formula to allocate joint cost as per physical measure method:

Cost allocated to joint product=Quantity of productTotal quantity of production×Total joint cost

Net Realizable Value (NRV) Method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Formula to allocate joint cost as per NRV method:

Cost allocated to joint product=NRV of productTotal NRV of production×Total joint cost

Where,

NRV=Sales value−Cost of further process or sell

To compute: Allocation of joint cost as per physical measure method:

1. b.

To determine

To compute: Allocation of joint cost as per NRV method.

2.

To determine

To compute: Operating income as per Physical measure method and NRV method.

3.

To determine

To identify: Pros and cons of physical measure method and NRV method.

4.

To determine

To prepare: Letter to taxation authorities.

Answer 6

Chapter 16, Problem 16.26E

1. a.

To determine

Physical Measurement Method:

Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume.

Formula to allocate joint cost as per physical measure method:

Cost allocated to joint product=Quantity of productTotal quantity of production×Total joint cost

Net Realizable Value (NRV) Method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Formula to allocate joint cost as per NRV method:

Cost allocated to joint product=NRV of productTotal NRV of production×Total joint cost

Where,

NRV=Sales value−Cost of further process or sell

To compute: Allocation of joint cost as per physical measure method:

Answer 7

Chapter 16, Problem 16.26E

1. a.

To determine

Physical Measurement Method:

Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume.

Formula to allocate joint cost as per physical measure method:

Cost allocated to joint product=Quantity of productTotal quantity of production×Total joint cost

Net Realizable Value (NRV) Method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Formula to allocate joint cost as per NRV method:

Cost allocated to joint product=NRV of productTotal NRV of production×Total joint cost

Where,

NRV=Sales value−Cost of further process or sell

To compute: Allocation of joint cost as per physical measure method:

Answer 8

1. b.

To determine

To compute: Allocation of joint cost as per NRV method.

Answer 9

1. b.

To determine

To compute: Allocation of joint cost as per NRV method.

Answer 10

2.

To determine

To compute: Operating income as per Physical measure method and NRV method.

Answer 11

2.

To determine

To compute: Operating income as per Physical measure method and NRV method.

Answer 12

3.

To determine

To identify: Pros and cons of physical measure method and NRV method.

Answer 13

3.

To determine

To identify: Pros and cons of physical measure method and NRV method.

Answer 14

4.

To determine

To prepare: Letter to taxation authorities.

Answer 15

4.

To determine

To prepare: Letter to taxation authorities.

Answer 16

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Ch. 16 - Give two examples of industries in which joint...Ch. 16 - What is a joint cost? What is a separable cost?Ch. 16 - Distinguish between a joint product and a...Ch. 16 - Why might the number of products in a joint-cost...Ch. 16 - Provide three reasons for allocating joint costs...Ch. 16 - Why does the sales value at splitoff method use...Ch. 16 - Prob. 16.7Q Ch. 16 - Distinguish between the sales value at splitoff...Ch. 16 - Give two limitations of the physical-measure...Ch. 16 - How might a company simplify its use of the NRV...

To compute: Allocation of joint cost as per NRV method.

To compute: Operating income as per Physical measure method and NRV method.

To identify: Pros and cons of physical measure method and NRV method.

To prepare: Letter to taxation authorities.

Chapter 16 Solutions