Fundamental Accounting Principles
Fundamental Accounting Principles
23rd Edition
ISBN: 9781259536359
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 10, Problem 3APSA
To determine

Depreciation:

Depreciation means depletion in the value of the asset due to continued utilization in the processes. It turns the asset obsolete after a certain period of time. Depreciation can be calculated by using straight line method or double declining method.

Asset-Cost Allocation:

Under the asset cost allocation method the indirect costs of the project are distributed to the values of other existing assets of the company.

1.

To prepare: Table showing cost allocation

Expert Solution
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Explanation of Solution

Allocation of Purchase Price Appraised Value Percentage Total of Appraised value Total Cost of Acquisition Apportioned Cost
Land 1,736,000 33.60 2,600,000 8,736,000
Building 2 644,000 12.46 2,600,000 323,960
Land Improvements 1 420,000 8.13 2,600,000 211,380
Building 3 22,02,000 42.62 2,600,000 1,108,120
Land Improvements 2 164,000 3.17 2,600,000 82,420
Total 5,166,000      

Table (1)

Adjustments for final value,

Adjustments Land Building2 Building3 Land Improvements 1 Land Improvements 2
Apportioned Cost 8,736,000 323,960 1,108,120 211,380 82,420
Cost of demolition 328,400        
Land Grading 175,400        
Final Value 369,800 323,960 1,108,120 211,380 82,420

Table (2)

2.

To determine

To prepare: Journal entries.

Date Account Title and Explanation Post ref Debit
($)
Credit
($)
Jan 1,2018 Land   369,800  
  Building 2   323,960  
  Building 3   1,108,120  
  Land Improvements 1   211,380  
  Land Improvements 2   82,420  
  Cash     2,095,680
  (Being costs incurred recorded)      

Table (3)

• Land is an asset which when purchased increases the value of asset hence debit land account.

• Building is an asset which when purchased ads to the value of asset hence debit building 2 account.

• Building is an asset which when purchased adds to the value of asset hence debit building 2 account.

• Land improvements increase the value of asset hence debit land improvements 1.

• Land improvements increase the value of asset hence debit land improvements 2.

• Cash is an asset which is decreased on account of such costs incurred hence credit cash account.

3.

To prepare: Adjusting entries to record depreciation.

Expert Solution
Check Mark

Explanation of Solution

Date Account Title and Explanation Post ref Debit
($)
Credit
($)
  Depreciation expense Building 2   13,198  
  Accumulated Depreciation Building 2     13,198
  (Being depreciation expense recorded)      

Table (4)

• Depreciation is an expense which decreases the value of the asset hence debit all expenses and losses

• Accumulated depreciation is creates a provision which is an income hence credit accumulated depreciation building 2.

Date Account Title and Explanation Post ref Debit
($)
Credit
($)
  Depreciation expense Building 3   28,644  
  Accumulated Depreciation Building 3     28,644
  (Being depreciation expense recorded)      

Table (5)

• Depreciation is an expense which decreases the value of the asset hence debit all expenses and losses

• Accumulated depreciation is creates a provision which is an income hence credit accumulated depreciation building 3.

Date Account Title and Explanation Post ref Debit
($)
Credit
($)
  Depreciation expense Land Improvements 1   32,500  
  Accumulated depreciation Land Improvements 1     32,500
  (Being land improvements 1 expense recorded)      

Table (6)

• Depreciation expense-Land improvements is an expense which decreases the value of the asset hence debit all expenses and losses

• Accumulated depreciation- Land improvement creates a provision which is an income hence credit accumulated depreciation- Land improvements1.

Date Account Title and Explanation Post ref Debit
($)
Credit
($)
  Depreciation expense Land Improvements 2   8,200  
  Accumulated depreciation Land Improvements 2     8,200
  (Being land improvements 2 expense recorded)      

Table (7)

• Depreciation expense-land improvement is an expense which decreases the value of the asset hence debit all expenses and losses.

• Accumulated depreciation- Land improvement creates a provision which is an income hence credit accumulated depreciation- Land improvements 2.

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Chapter 10 Solutions

Fundamental Accounting Principles

Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 16DQCh. 10 - Prob. 17DQCh. 10 - Prob. 18DQCh. 10 - Refer to Samsun g's balance sheet in Appendix A....Ch. 10 - Prob. 20DQCh. 10 - Prob. 21DQCh. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - Prob. 3QSCh. 10 - Prob. 4QSCh. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Prob. 9QSCh. 10 - Prob. 10QSCh. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Exercise 10-5 Units-of-production depreciation P1...Ch. 10 - Exercise 10-6 Double-declining-balance...Ch. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Exercise 10-10 Double-declining-balance...Ch. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 14ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Prob. 21ECh. 10 - Prob. 22ECh. 10 - Prob. 23ECh. 10 - Prob. 24ECh. 10 - Prob. 25ECh. 10 - Prob. 1APSACh. 10 - Problem 1O-2A Depreciation methods P1 A machine...Ch. 10 - Prob. 3APSACh. 10 - Prob. 4APSACh. 10 - Prob. 5APSACh. 10 - Prob. 6APSACh. 10 - Problem 1O7A Natural resources P3 On July 23 of...Ch. 10 - Prob. 8APSACh. 10 - Problem 10-1B Plant asset costs: depreciation...Ch. 10 - Problem 10-28 Depreciation methods P1 On January...Ch. 10 - Problem 10-3B Asset cost allocation; straight-line...Ch. 10 - Prob. 4BPSBCh. 10 - Problem 1O-5B Computing and revising depreciation;...Ch. 10 - Problem 1O-6B Disposal of plant assets C1 P1 P2 On...Ch. 10 - Problem 10-78 Natural resources P3 On February 19...Ch. 10 - Prob. 8BPSBCh. 10 - Prob. 10SPCh. 10 - Prob. 1BTNCh. 10 - Prob. 2BTNCh. 10 - Prob. 3BTNCh. 10 - Prob. 4BTNCh. 10 - Prob. 5BTNCh. 10 - Prob. 6BTNCh. 10 - Prob. 7BTNCh. 10 - Prob. 8BTNCh. 10 - Prob. 9BTN
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Depreciation -MACRS; Author: Ronald Moy, Ph.D., CFA, CFP;https://www.youtube.com/watch?v=jsf7NCnkAmk;License: Standard Youtube License