Ch10 Beechy3e case 3 solution Essay

17682 WordsJan 28, 201571 Pages
Solutions for some acct 400 cases here - Chapter 10 Suggested Time Case 10-1 Good Quality Auto Parts 10-2 Canadian Wilderness Wonders Inc 10-3 Provincial Hydro 10-4 May Company 10-5 Canadian Energy Corporation Assignment 10-1 Amortization policy 10 10-2 Amortization policy 15 10-3 Amortization computation 15 10-4 Amortization computation (*W) 25 10-5 Amortization schedule 30 10-6 Analysis of four amortization methods—maximize income (*W) 20 10-7 Interpreting amortization disclosures 20 10-8 Identify amortization methods—amortization schedules 15 10-9 Identify, recalculate amortization 20 10-10…show more content…
If rates are different for similar assets, comparability is also hurt; again, disclosure is important. 7. A firm would consider the following factors in their choice of amortization methods: nature and use of asset, corporate reporting objectives, industry norms, parent company preferences, the desire to minimize future (deferred) taxes, and the accounting system costs associated with a given method. 8. An asset with a thirty-year life will be amortized over a shorter period when it is expected to be used (will generate revenue) for the shorter period. 9. The straight-line method reports depreciation as a variable amount per unit of output and a fixed amount per period, whereas the productive output method reports depreciation as a fixed amount per unit of output and a variable amount per period. 10. Straight-line amortization is likely popular because it is simple to calculate, logically appealing, rational and systematic, often portrays the pattern of benefits received (equal each period), and because it provides a stable expense pattern. 11. Accelerated methods of amortization result in a periodic amortization charge that is less in each succeeding period than the prior period. There are a number of variations of the accelerated methods, such as the declining balance method and the sum-of-the-years’-digits method. These methods are appropriate when an asset contributes to revenue

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