FUNDAMENTALS OF FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781260664386
Author: PHILLIPS, LIBB
Publisher: MCG
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Chapter 9, Problem 1SDC
1.
To determine
Calculate the amount of
2.
To determine
Calculate the amount of depreciation and amortization expense that would be reported for the year ended January 29, 2017 and describe the percentage of net sales.
3.
To determine
Calculate the fixed asset turnover ratio for the year ended January 29, 2017.
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Question 1
Glowing Incorporation closes its accounts on March 31 annually. Below is an extract of its
balance sheet as at March 31, 2014.
Non-Current Assets
Useful Life
Net Book
Value
Residual Value
Buildings
40 Years
$2,000
Machinery
10 Years
$53,626
$6,500
(130,000 machine hours)
Fixtures and Fittings
8 Years
$30,600
$4,250
It is the policy of the company to charge depreciation expense as follows:
Buildings
Straight Line Method
Machinery
Units of Activity Method
Fixtures and Fittings
Declining Balance Method
Additional information:
1. The assets above were purchased as follows:
Non-Current Assets
Date of Purchase
Purchase Price
Buildings
April 1, 2010
$80,000
Machinery
January 31, 2011
$65,000
Fixtures and Fittings
May 1, 2013
$34,000
2. Actual machine hours used in the production process is 4,200 hours
Accounting
Property and equipment, at cost, consisted of the following:
December 31, 2017 2018
Gross property and equipment:
Land $ 22,058.38 $ 30,850.93
Equipment 37,411.98 48,949.37
Other assets 1,451.47 1,566.73
Construction in progress 5,859.76 9,469.74
Gross property and equipment 66,781.59 90,836.47
Total accum dep and amort 23,255.12 29,867.63
Total property and equipment, net…
Information for Everett Evacuators for 2018 and 2017 is presented below. Everett uses
the straight-line depreciation method.
2018
2017
Non-current assets
$388 000
$299 250
Accumulated depreciation
100 000
65 000
Depreciation expense
60 000
47 000
Total revenues
1 000 000
900 000
Total assets
625 000
475 000
Using the data for 2017, determine the average useful life of Everett's non-current
assets rounded to one decimal place.
O 6.9 years
6.4 years
O 4.6 years
O 1.7 years
Chapter 9 Solutions
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Ch. 9 - Define long-lived assets. What are the two common...Ch. 9 - Under the cost principle, what amounts should be...Ch. 9 - What is the term for recording costs as assets...Ch. 9 - 4. Waste Management, Inc., regularly incurs costs...Ch. 9 - Distinguish between ordinary repairs and...Ch. 9 - Describe the relationship between the expense...Ch. 9 - Why are different depreciation methods allowed?Ch. 9 - In computing depreciation, three values must be...Ch. 9 - Prob. 9QCh. 9 - After merging with Northwest Airlines, Delta...
Ch. 9 - A local politician claimed, to reduce the...Ch. 9 - What is an asset impairment? How is it accounted...Ch. 9 - What is book value? When equipment is sold for...Ch. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - FedEx Corporation reports the cost of its aircraft...Ch. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - (Supplement 9A) How does depletion affect the...Ch. 9 - (Supplement 9B) Over what period should an...Ch. 9 - Prob. 1MCCh. 9 - Prob. 2MCCh. 9 - Prob. 3MCCh. 9 - A company wishes to report the highest earnings...Ch. 9 - Barber, Inc., depreciates its building on a...Ch. 9 - Thornton Industries purchased a machine on July 1...Ch. 9 - ACME. Inc., uses straight-line depreciation for...Ch. 9 - What assets should be amortized using the...Ch. 9 - Prob. 9MCCh. 9 - The Simon Company and the Allen Company each...Ch. 9 - Classifying Long-Lived Assets and Related Cost...Ch. 9 - Prob. 2MECh. 9 - Prob. 3MECh. 9 - Computing Book Value (Straight-Line Depreciation)...Ch. 9 - Computing Book Value (Units-of-Production...Ch. 9 - Computing Book Value (Double-Declining-Balance...Ch. 9 - Calculating Partial-Year Depreciation Calculate...Ch. 9 - Recording Asset Impairment Losses After recording...Ch. 9 - Recording the Disposal of a Long-Lived Asset...Ch. 9 - Reporting and Recording the Disposal of a...Ch. 9 - Prob. 11MECh. 9 - Prob. 12MECh. 9 - Computing and Evaluating the Fixed Asset Turnover...Ch. 9 - (Supplement 9A) Recording Depletion for a Natural...Ch. 9 - Prob. 15MECh. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Determining Financial Statement Effects of an...Ch. 9 - Prob. 4ECh. 9 - Determining Financial Statement Effects of...Ch. 9 - Computing Depreciation under Alternative Methods...Ch. 9 - Computing Depreciation under Alternative Methods...Ch. 9 - Prob. 8ECh. 9 - Demonstrating the Effect of Book Value on...Ch. 9 - Evaluating the Impact of Estimated Useful Lives of...Ch. 9 - Calculating the Impact of Estimated Useful Lives...Ch. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Computing and Interpreting the Fixed Asset...Ch. 9 - Computing Depreciation and Book Value for Two...Ch. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Prob. 2CPCh. 9 - Analyzing and Recording Long-Lived Asset...Ch. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Recording and Interpreting the Disposal of...Ch. 9 - Prob. 3PACh. 9 - Prob. 4PACh. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Recording and Interpreting the Disposal of...Ch. 9 - Analyzing and Recording Long-Lived Asset...Ch. 9 - Prob. 4PBCh. 9 - Accounting for Operating Activities (Including...Ch. 9 - Prob. 1SDCCh. 9 - Prob. 2SDCCh. 9 - Ethical Decision Making: A Mini-Case Assume you...Ch. 9 - Critical Thinking: Analyzing the Effects of...Ch. 9 - Prob. 7SDCCh. 9 - Accounting for the Use and Disposal of Long-Lived...
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