Book value of fixed assets
Apple. Inc., designs, manufactures, and markets personal computers (iPad’) and related software. Apple also manufactures and distributes music players (iPod’) along with related accessories and services, including the online distribution of third-party music. The following information was adapted from a recent annual report of Apple:
Property. Plant, and Equipment (In millions):
Compute the book value of the fixed asset for Years I and 2 and explain the differences, if any.
b. Would you normally expect the book value of fixed assets to increase or decrease during the year?
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- Comparative Analysis: Under Armour, Inc., versus Columbia Sportswear Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: With regard to depreciation methods: a. What depreciation method does Under Armour use? What depreciation method does Columbia use? b. What are the typical useful lives of each companys operating assets? c. What effect will the useful lives have on the companys financial statements?arrow_forwardINTANGIBLE LONG-TERM ASSETS Track Town Co. had the following transactions involving intangible assets: Jan. 1 Purchased a patent for leather soles for 10,000 and estimated its useful life to be 10 years. Apr. 1 Purchased a copyright for a design for 15,000 with a life left on the copyright of 25 years. The estimated remaining (economic) life of the copyright is five years. July 1 Signed a five-year franchise agreement and opened a Starting Line high-tech running shoe store. Paid 50,000 to the franchisor. REQUIRED 1. Using the straight-line method, calculate the amortization of the patent, copyright, and franchise. 2. Prepare general journal entries to record the end-of-year amortizations.arrow_forwardAccounting standard IAS16: Property, Plant and Equipment make a number of recognition, measurement and disclosure requirements with regard to tangible non-current assets. The term "non-current asset" is defined in accounting standard IAS1: Presentation of Financial Statements. The information given below relates to two companies, both of which prepare accounts by 31 December. Tom Limited: Joy Plc bought a factory machine on 30 June 2020 and paid a total of £420,000. The supplier's invoice showed that this sum was made up of the following items: £ Manufacturer's list price 380,000 Less: Trade discount 38,000 342,000 Delivery charge 6,800 Installation costs 29,600 Maintenance charge for a year to 30 June 2021 27,000 Small spare parts 14,600 £420,000 Jerry Limited: On 1 January 2010, Jerry Ltd bought freehold property for £800,000. This figure was made up of land £300,000 and buildings £500,000. The land was non-depreciable…arrow_forward
- Accounting standard IAS16: Property, Plant and Equipment make a number of recognition, measurement and disclosure requirements with regard to tangible non-current assets. The term "non-current asset" is defined in accounting standard IAS1: Presentation of Financial Statements. The information given below relates to two companies, both of which prepare accounts by 31 December. Tom Limited: Joy Plc bought a factory machine on 30 June 2020 and paid a total of £420,000. The supplier's invoice showed that this sum was made up of the following items: £ Manufacturer's list price 380,000 Less: Trade discount 38,000 342,000 Delivery charge 6,800 Installation costs 29,600 Maintenance charge for a year to 30 June 2021 27,000 Small spare parts 14,600 £420,000 Jerry Limited: On 1 January 2010, Jerry Ltd bought freehold property for £800,000. This figure was made up of land £300,000 and buildings £500,000. The land was non-depreciable…arrow_forwardCosts of acquiring fixed assetsMelinda Stoffers owns and operates ABC Print Co. During February, ABCincurred the following costs in acquiring two printing presses. Oneprinting press was new, and the other was purchased from a businessthat recently filed for bankruptcy.Costs related to new printing press: 1. Fee paid to factory representative for installation2. Freight3. Insurance while in transit4. New parts to replace those damaged in unloading5. Sales tax on purchase price6. Special foundation Costs related to used printing press:7. Fees paid to attorney to review purchase agreement8. Freight9. Installation 10. Repair of damage incurred in reconditioning the press11. Replacement of worn-out parts12. Vandalism repairs during installation a. Indicate which costs incurred in acquiring the new printingpress should be debited to the asset account.b. Indicate which costs incurred in acquiring the used printingpress should be debited to the asset account.arrow_forwardIntangibles: Balance Sheet Presentation and Income Statement Effects Clinton Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,680,000 on January 1, 2018. Clinton estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou's accounting records at a net book value of $1,440,000 when Lou sold it to Clinton. During 2019, a franchise was purchased from Rink Company for $500,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $1,800,000. Clinton estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Clinton incurred R&D costs in 2019 as follows: Materials and equipment $125,000 Personnel 162,000 Indirect costs 78,000 $365,000 Clinton estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Clinton estimates, based on new…arrow_forward
- Evergreen Corporation (calendar year-end) acquired the following assets during the current year: (Use MACRS Table 1 and Table 2.) Asset Date Placed in Service Original Basis Machinery October 25 $ 90,000 Computer equipment February 3 25,000 Used delivery truck* August 17 38,000 Furniture April 22 175,000 *The delivery truck is not a luxury automobile. b. What is the allowable depreciation on Evergreen’s property in the current year if Evergreen does not elect out of bonus depreciation?arrow_forwardIntangibles: Balance Sheet Presentation and Income Statement Effects Valen Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,215,000 on January 1, 2018. Valen estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $955,000 when Lou sold it to Valen. During 2019, a franchise was purchased from Rink Company for $430,000. In addition, 4% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,100,000. Valen estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Valen incurred R&D costs in 2019 as follows: Materials and equipment $108,000 Personnel 133,000 Indirect costs 78,000 $319,000 Valen estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Valen estimates, based on new events, that the…arrow_forwardRead the following case and calculate the book value of Home Depot's current and prior year fixed assets.Explain the difference in the book value between the two years.Home Depot is a distributor of building materials, gardening and kitchen equipment, among others. The following information is from the company's books. Fixed assets Current year Previous year Buildings $28,300 $21,500 Machinery, equipment, and computer systems 32,250 22,600 Other fixed assets 6,800 8.200 Accumulated depreciation and amortization (31,500) (23,100)arrow_forward
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