INTERMEDIATE ACCT VOL.2>CUSTOM<
9th Edition
ISBN: 9781307165067
Author: SPICELAND
Publisher: MCG/CREATE
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Textbook Question
Chapter 11, Problem 11.22E
Change in estimate; useful life and residual value of equipment
• LO11–2, LO11–5
Wardell Company purchased a minicomputer on January 1, 2016, at a cost of $40,000. The computer was
Required:
1. Prepare the year-end
2. Repeat requirement 1 assuming that the company uses the sum-of-the-years’-digits method instead of the straight-line method.
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P11.2 (LO 1,2) (Deprec. for partial periods - SL, Act., SYD, and Declining-Balance) The cost of equip. purchased by Charleston, Inc., on June 1, 2020, is $89,000. It is estimated that the machine will have a $5,000 salvage value at the end of it's service life.
It's service life is estimated at 7 years, it's total working hours are estimated at 42,000, and it's total production is estimated at 525,000 units.
During 2020, the machine was operated 6,000 hours and produced 55,000 units. During 2021, the machine was operated 5,500 hours and produced 48,000 units.
Instructions:
Compute deprec. expense on the machine for the year ending Dec. 31, 2020, and the year ending Dec. 31, 2021, using the following methods.
A. Sum-of-the-years'-digits.
B. Declining-balance (twice the straight-line rate).
P11.2 (LO 1, 2) (Deprec. for partial periods - SL, Act., SYD, and Declining - Balance) The cost of equip. purchased by Charleston, Inc. on June 1, 2020, is $89,000. It is estimated that the machine will have a $5,000 salvage value at the end of it's service life.
It's service life is estimated at 7 years, it's total working hours are estimated at 42,000, and it's total production is estimated at 525,000 units.
During 2020, the machine was operated 6,000 hours and produced 55,000 units. During 2021, the machine was operated 5,500 hours and produced 48,000 units.
Instructions: Compute deprec. expense on the machine for the year ending Dec. 31, 2020, and the year ending Dec. 31, 2021, using the following methods.
a. Straight-line.
b. Units-of-output.
c. Working hours.
d. Sum-of-the-years'-digits.
e. Declining-balance (twice the straight-line rate).
E10.21 (LO3) (Government Grants) Rialto Group received a grant from the government of £100,000 to acquire £500,000 of delivery equipment on January 2, 2019. The delivery equipment has a useful life of 5 years. Rialto uses the straight-line method of depreciation. The delivery equipment has a zero residual value.
Instructions
A. If Rialto Group reports the grant as a reduction of the asset, answer the following questions.
1. What is the carrying amount of the delivery cquipment on the statement of financial position at December 31I, 2019?
2. What is the amount of depreciation expense related to the delivery equipment in 2020?
3. What is the amount of grant revenue reported in 2019 on the income statement?
B. If Rialto Group reports the grant as deferred grant revenue, answer the following questions.
1. What is the balance in the deferred grant revenue account at December 31, 2019?…
Chapter 11 Solutions
INTERMEDIATE ACCT VOL.2>CUSTOM<
Ch. 11 - Prob. 11.1QCh. 11 - Depreciation is a process of cost allocation, not...Ch. 11 - Identify and define the three characteristics of...Ch. 11 - Discuss the factors that influence the estimation...Ch. 11 - What is meant by depreciable base? How is it...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - Why are time-based depreciation methods used more...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Briefly explain the differences and similarities...Ch. 11 - Prob. 11.12QCh. 11 - Prob. 11.13QCh. 11 - What are some of the simplifying conventions a...Ch. 11 - Explain the accounting treatment required when a...Ch. 11 - Explain the accounting treatment and disclosures...Ch. 11 - Explain the steps required to correct an error in...Ch. 11 - Prob. 11.18QCh. 11 - Prob. 11.19QCh. 11 - Prob. 11.20QCh. 11 - Prob. 11.21QCh. 11 - Briefly explain the differences between U.S. GAAP...Ch. 11 - Under U.S. GAAP, litigation costs to successfully...Ch. 11 - Cost allocation At the beginning of its fiscal...Ch. 11 - Depreciation methods LO112 On January 1, 2018,...Ch. 11 - Depreciation methods; partial periods LO112 Refer...Ch. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Group depreciation; disposal LO112 Mondale Winery...Ch. 11 - Prob. 11.8BECh. 11 - Prob. 11.9BECh. 11 - Prob. 11.10BECh. 11 - Change in principle; change in depreciation method...Ch. 11 - Prob. 11.12BECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.14BECh. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Subsequent expenditures LO119 Demmert...Ch. 11 - Depreciation methods LO112 On January 1, 2018,...Ch. 11 - Prob. 11.2ECh. 11 - Depreciation methods; partial periods LO112 [This...Ch. 11 - Depreciation methods; asset addition; partial...Ch. 11 - Depreciation methods; solving for unknowns LO112...Ch. 11 - Depreciation methods; partial periods LO112 On...Ch. 11 - Prob. 11.7ECh. 11 - IFRS; depreciation; partial periods LO112, LO1110...Ch. 11 - IFRS; revaluation of machinery; depreciation;...Ch. 11 - Disposal of property, plant, and equipment LO112...Ch. 11 - Disposal of property, plant, and equipment;...Ch. 11 - Depreciation methods; disposal; partial periods ...Ch. 11 - Group depreciation LO112 Highsmith Rental Company...Ch. 11 - Double-declining-balance method; switch to...Ch. 11 - Prob. 11.15ECh. 11 - Prob. 11.16ECh. 11 - Cost of a natural resource; depletion and...Ch. 11 - Prob. 11.18ECh. 11 - Prob. 11.19ECh. 11 - Prob. 11.20ECh. 11 - Prob. 11.21ECh. 11 - Change in estimate; useful life and residual value...Ch. 11 - Change in principle; change in depreciation...Ch. 11 - Change in principle; change in depreciation...Ch. 11 - Prob. 11.25ECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - IFRS; Impairment; property, plant, and equipment ...Ch. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.30ECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Prob. 11.32ECh. 11 - FASB codification research LO118 The FASB...Ch. 11 - Prob. 11.34ECh. 11 - Subsequent expenditures LO119 Belltone Company...Ch. 11 - Prob. 11.36ECh. 11 - Concept s; terminology LO111 through LO116, LO118...Ch. 11 - Retirement and replacement depreciation Appendix...Ch. 11 - Depreciation methods; change in methods LO112,...Ch. 11 - Prob. 11.2PCh. 11 - Depreciation methods; partial periods Chapters 10...Ch. 11 - Partial- year depreciation; asset addition;...Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Prob. 11.7PCh. 11 - Prob. 11.8PCh. 11 - Straight-line depreciation; disposal; partial...Ch. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Prob. 11.12PCh. 11 - Depreciation and depletion; change in useful life;...Ch. 11 - Analysis Case 111 Depreciation, depletion, and...Ch. 11 - Communication Case 112 Depreciation LO111 At a...Ch. 11 - Judgment Case 113 Straight-line method; composite...Ch. 11 - Prob. 11.4BYPCh. 11 - Prob. 11.5BYPCh. 11 - Prob. 11.7BYPCh. 11 - Prob. 11.8BYPCh. 11 - Research Case 119 FASB codification; locate and...Ch. 11 - Ethics Case 1110 Asset impairment LO118 At the...Ch. 11 - Prob. 11.11BYPCh. 11 - Prob. 11.13BYPCh. 11 - Real World Case 1114 Disposition and depreciation;...Ch. 11 - Real World Case 1115 Depreciation and depletion...Ch. 11 - Prob. 11.16BYPCh. 11 - Target Case LO112, LO118, LO119 Target...
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