Question 1

You purchased Company B for $220,000 on January 1,2014.Company B's assets were valued as follows:
  In addition,you opened a company bank account and deposited $30,000 cash.All liabilities were paid prior to the transfer of ownership.Create the balance sheet for Company B under your ownership.

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Question 2

Under what circumstances will a loss be recorded on the sale of equipment,and what effect will the loss have on stockholders' equity?

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Question 3

Present two arguments in favor of the use of accelerated depreciation.

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Question 4

Mercado Photography purchased photographic equipment for $75,000.The equipment was to be used for ten years and had a $5,000 estimated residual value.After the company took three years of straight-line depreciation,it decided that the equipment would instead have a $2,000 residual value and a total useful life of eleven years.Calculate depreciation expense that should be recorded in year 4.(Show your work.)

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Question 5

The following machines were purchased during 2014:
Machine A for $6,000 on April 5
Machine B for $4,000 on August 24
Machine C for $5,000 on November 10
Assuming that each machine has an estimated useful life of six years and a 10 percent residual value,calculate total depreciation expense for 2014 (assume straight-line depreciation and round to the nearest month and the company reports on a calendar-year basis).

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The answer of The following machines were purchased during 2014:
Machine...

Question 6

On January 2,2013,Topanga Company purchased a machine for $90,000.The machine has a five-year estimated useful life and a $6,000 estimated residual value.In addition,the company expects to use the machine 200,000 hours.Assuming that the machine was used 35,000 hours during 2014,complete the following chart.If a figure cannot be determined,indicate so by placing an "X" in the box.(Show your work.)

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Question 7

What commitments must a company account for in determining its free cash flow?

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Question 8

For each description,provide the letter of the intangible asset that is being described.

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Question 9

On January 1,2014,Huan Manufacturing Company purchased for $94,000 a machine that will produce an estimated 75,000 units of Product X.The machine has an estimated useful life of five years and an estimated residual value of $4,000.Calculate the following amounts: (a)the carrying value of the machine after it has been used for three and one-half years,under the straight-line method; (b)depreciation expense for 2015,under the production method (assume that 13,000 units were produced that year); and (c)accumulated depreciation at the end of 2015,under the double-declining-balance method.(Show your work.)

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Question 10

In 2014,Mansfield Mining purchased a mineral deposit for $12,000,000.It is estimated that 15,000,000 tons can be extracted from the mine.Calculate depletion expense during 2014 assuming 800,000 tons were extracted and 700,000 tons were sold.

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Question 11

Mozilla Mining Company purchased land containing an estimated 10,000,000 tons of ore for a cost of $750,000.The land without the ore is estimated to be worth $150,000 (the residual value).Buildings costing $45,000 with an estimated useful life of 20 years were erected on the site.Because of the remote location,the buildings have no residual value.The company expects that all the usable ore can be mined in eight years.During its first year of operation,the company mined 1,000,000 tons of ore and at the end of the year had an inventory of 200,000 tons.Determine the following amounts for the first year: (a)depletion charge per ton; (b)depletion expense for year; and (c)depreciation expense for buildings,using the straight-line method.(Show your work.)

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Question 12

Russell Company's air-conditioning system has just completed the eighth year of an estimated ten-year life.The system cost $60,000 and now has accumulated depreciation of $48,000.At the beginning of the ninth year,the company expects to spend $16,000 on a complete renovation of the system and expects the total life of the system to be fifteen years.Neither the capacity of the system nor the residual value was increased.The company uses the straight-line method to determine depreciation.Determine the following: (a)the account debited for the cost of renovation,(b)the carrying value of the system after renovation,and (c)the depreciation expense for the ninth year.

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Question 13

What is goodwill and when may it be recorded?

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Question 14

Grannis Corporation purchased land adjacent to its plant to improve access for trucks making deliveries.Expenditures incurred by the company were as follows: purchase price,$40,000; broker's fees,$7,000; title search and other fees,$6,000; demolition of an old building on the property,$3,700; grading,$1,200; digging foundation for the road,$3,000; laying and paving driveway,$25,000; lighting,$7,500; signs,$1,500.List the items and the amounts that should be included in the cost of the land and recorded in the Land account.

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Question 15

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

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Question 16

Discuss the difference between the successful efforts and full-costing methods of accounting for oil and gas resources.What type of company is most likely to use each method?

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Question 17

Gonzalez Printing purchased a new printing press for $80,000.It depreciates the press over a five-year period,using the double-declining-balance method of depreciation.If the press has an $8,000 estimated residual value,calculate depreciation expense for each of the five years.(Show your work.)

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Question 18

In general,how does one determine whether or not an expenditure should be included in the acquisition cost of property,plant,and equipment?

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Question 19

Preston Corporation purchased a truck for $40,000.The company expected the truck to last four years or 100,000 miles,with an estimated residual value of $4,000 at the end of that time.During the second year,the truck was driven 27,500 miles.Compute the depreciation for the second year under each of the following methods: (a)straight-line,(b)production,and (c)double-declining-balance.(Show your work.)

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Question 20

Suppose an accounting intern mistakenly calculated depreciation expense on the Land account.She assigned it a 50-year life and a residual value of $10,000,000.Using the cost of the land (assume it was $811,000,000)and the straight-line method of depreciation,discuss the dollar effect of this error on pretax earnings and total assets.

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Quiz 10: Long -Term Assets

You purchased Company B for $220,000 on January 1,2014.Company B's assets were valued as follows: In addition,you opened a company bank account and deposited $30,000 cash.All liabilities were paid prior to the transfer of ownership.Create the balance sheet for Company B under your ownership.