Chapter 9 Practice Problems
Chapter 9 Practice Problems
S9-2.
Asset
Market
Value
Percentage of Total Value
× Total
Purchase
Price
= Assigned Cost of Each Asset
Land
$ 80,000
$80,000 / $160,000 = 50%
× $150,000
= $ 75,000
Building
60,000
$60,000 / $160,000 = 38%
× $150,000
= 57,000
Equipment
20,000
$20,000 / $160,000 = 12%
× $150,000
= 18,000
Total
$ 160,000
100%
$ 150,000
Date
Accounts and Explanation
Debit
Credit
Land
75,000
Building
57,000
Equipment
18,000
Notes Payable
150,000
To record purchase of land, building, and equipment in exchange for note payable.
S9-4.
Requirement 1
a.
Straight-line
=
(Cost − Residual value) / Useful life
=
($35,000,000 ̶ $5,000,000) / 5 years
=
$6,000,000 per year
b.
Depreciation per unit
=
(Cost – Residual value) / Useful life in units
=
($35,000,000 ̶ $5,000,000) / 6,000,000 miles
=
$5 per mile
Units-of-production
=
Depreciation per unit × Current year usage
=
$5 per mile × 1,000,000 miles
=
$5,000,000 for year 1
c.
Double-declining-balance
=
(Cost – Accumulated depreciation) × 2 × (1 / Useful life)
=
($35,000,000 ̶ $0) × 2 × (1/ 5 years)
=
$14,000,000 for year 1
S9-5.
a.
Straight-line
=
(Cost − Residual value) / Useful life
=
($35,000,000 ̶ $5,000,000) / 5 years
=
$6,000,000 per year, second year = $6,000,000
b.
Depreciation per unit
=
(Cost – Residual value) / Useful life in units
=
($35,000,000 ̶ $5,000,000) / 6,000,000 miles
=
$5 per mile
Units-of-production
=
Depreciation per unit × Current year usage
=
$5 per mile × 1,500,000 miles
=
$7,500,000 in year 2
c.
Double-declining-balance
=
(Cost – Accumulated depreciation) × 2 × (1 / Useful life)
=
($35,000,000 ̶ $0) × 2 × (1/ 5 years)
=
$14,000,000 in year 1
=
(Cost – Accumulated depreciation) × 2 × (1 / Useful life)
=
($35,000,000 ̶ $14,000,000) × 2 × (1/ 5 years)
=
$8,400,000 in year 2
S9-7.
Straight-line
=
(Cost − Residual value) / Useful life
=
($80,000 ̶ $8,000)
S9-2.
Asset
Market
Value
Percentage of Total Value
× Total
Purchase
Price
= Assigned Cost of Each Asset
Land
$ 80,000
$80,000 / $160,000 = 50%
× $150,000
= $ 75,000
Building
60,000
$60,000 / $160,000 = 38%
× $150,000
= 57,000
Equipment
20,000
$20,000 / $160,000 = 12%
× $150,000
= 18,000
Total
$ 160,000
100%
$ 150,000
Date
Accounts and Explanation
Debit
Credit
Land
75,000
Building
57,000
Equipment
18,000
Notes Payable
150,000
To record purchase of land, building, and equipment in exchange for note payable.
S9-4.
Requirement 1
a.
Straight-line
=
(Cost − Residual value) / Useful life
=
($35,000,000 ̶ $5,000,000) / 5 years
=
$6,000,000 per year
b.
Depreciation per unit
=
(Cost – Residual value) / Useful life in units
=
($35,000,000 ̶ $5,000,000) / 6,000,000 miles
=
$5 per mile
Units-of-production
=
Depreciation per unit × Current year usage
=
$5 per mile × 1,000,000 miles
=
$5,000,000 for year 1
c.
Double-declining-balance
=
(Cost – Accumulated depreciation) × 2 × (1 / Useful life)
=
($35,000,000 ̶ $0) × 2 × (1/ 5 years)
=
$14,000,000 for year 1
S9-5.
a.
Straight-line
=
(Cost − Residual value) / Useful life
=
($35,000,000 ̶ $5,000,000) / 5 years
=
$6,000,000 per year, second year = $6,000,000
b.
Depreciation per unit
=
(Cost – Residual value) / Useful life in units
=
($35,000,000 ̶ $5,000,000) / 6,000,000 miles
=
$5 per mile
Units-of-production
=
Depreciation per unit × Current year usage
=
$5 per mile × 1,500,000 miles
=
$7,500,000 in year 2
c.
Double-declining-balance
=
(Cost – Accumulated depreciation) × 2 × (1 / Useful life)
=
($35,000,000 ̶ $0) × 2 × (1/ 5 years)
=
$14,000,000 in year 1
=
(Cost – Accumulated depreciation) × 2 × (1 / Useful life)
=
($35,000,000 ̶ $14,000,000) × 2 × (1/ 5 years)
=
$8,400,000 in year 2
S9-7.
Straight-line
=
(Cost − Residual value) / Useful life
=
($80,000 ̶ $8,000)