Fundamentals of Financial Accounting - With Access
5th Edition
ISBN: 9781259695858
Author: PHILLIPS
Publisher: MCG
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Chapter 9, Problem 10Q
After merging with Northwest Airlines, Delta Airlines increased the estimated useful life and increased the estimated residual value of its flight equipment. All else equal, how will each of these changes affect Delta’s
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On a given day, two companies with the same accounting year end buy identical machinery for the same price. They both use the straight–line method of depreciation, but whilst Company X assumes the asset will have a 5-year useful life, Company Y assumes a 7-year life. Which of the following statements is true?
a) For each company, the depreciation charge in the first Income Statement prepared will equal the asset’s depreciation provision in the Statement of Financial Position.
b) The depreciation charge in the first Income Statement prepared will be the same for both companies.
c) In the first year, the depreciation charged by Company X will be less than that charged by Company Y.
d) The purchase of the asset will reduce total non-current assets in the Statements of Financial Position of both companies.
Hilo Company has land that cost $350,000 but now has a fair value of $500,000. Hilo Company decides to use the revaluation method specified in IFRS to account for the land. Which of the following statements is correct?
a. Hilo Company must continue to report the land at $350,000.
b. Hilo Company would report a net income increase of $150,000 due to an increase in the value of the land.
c. Hilo Company would debit Revaluation Surplus for $150,000.
d. Hilo Company would credit Revaluation Surplus by $150,000.
Norfolk Plc., an IFRS reporter, is revaluing equipment with a carrying value of £984,500 to its fair value of £964,500. The original cost of the equipment was £1,400,000. The equipment has a 10-year useful life and scrap value of £15,000. Norfolk uses straight-line depreciation. Assume that Norfolk eliminates all prior accumulated depreciation and adjusts the historical cost to fair value.
a.
What is the revaluation surplus or unrealized loss?
b.
Where does the firm report the revaluation surplus or unrealized loss in the financial statements?
c.
What are the journal entries to record the revaluation?
d.
What is the depreciation expense on the equipment after the revaluation?
e.
Norfolk chooses to take any revaluation surplus to retained earnings over the equipment's remaining useful life. What is the amount of the surplus, if any, taken to retained earnings in the year after revaluation?
f.
If Norfolksells the equipment at the end of…
Chapter 9 Solutions
Fundamentals of Financial Accounting - With Access
Ch. 9 - Define long-lived assets. What are the two common...Ch. 9 - Under the cost principle, what amounts should be...Ch. 9 - What is the term for recording costs as assets...Ch. 9 - 4. Waste Management, Inc., regularly incurs costs...Ch. 9 - Distinguish between ordinary repairs and...Ch. 9 - Describe the relationship between the expense...Ch. 9 - Why are different depreciation methods allowed?Ch. 9 - In computing depreciation, three values must be...Ch. 9 - Prob. 9QCh. 9 - After merging with Northwest Airlines, Delta...
Ch. 9 - A local politician claimed, to reduce the...Ch. 9 - What is an asset impairment? How is it accounted...Ch. 9 - What is book value? When equipment is sold for...Ch. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - FedEx Corporation reports the cost of its aircraft...Ch. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - (Supplement 9A) How does depletion affect the...Ch. 9 - (Supplement 9B) Over what period should an...Ch. 9 - Prob. 1MCCh. 9 - Prob. 2MCCh. 9 - Prob. 3MCCh. 9 - A company wishes to report the highest earnings...Ch. 9 - Barber, Inc., depreciates its building on a...Ch. 9 - Thornton Industries purchased a machine on July 1...Ch. 9 - ACME. Inc., uses straight-line depreciation for...Ch. 9 - What assets should be amortized using the...Ch. 9 - Prob. 9MCCh. 9 - The Simon Company and the Allen Company each...Ch. 9 - Classifying Long-Lived Assets and Related Cost...Ch. 9 - Prob. 9.2MECh. 9 - Prob. 9.3MECh. 9 - Computing Book Value (Straight-Line Depreciation)...Ch. 9 - Computing Book Value (Units-of-Production...Ch. 9 - Computing Book Value (Double-Declining-Balance...Ch. 9 - Calculating Partial-Year Depreciation Calculate...Ch. 9 - Prob. 9.8MECh. 9 - Recording the Disposal of a Long-Lived Asset...Ch. 9 - Reporting and Recording the Disposal of a...Ch. 9 - Prob. 9.11MECh. 9 - Prob. 9.12MECh. 9 - Computing and Evaluating the Fixed Asset Turnover...Ch. 9 - (Supplement 9A) Recording Depletion for a Natural...Ch. 9 - Prob. 9.15MECh. 9 - Prob. 9.1ECh. 9 - Prob. 9.2ECh. 9 - Determining Financial Statement Effects of an...Ch. 9 - Prob. 9.4ECh. 9 - Prob. 9.5ECh. 9 - Computing Depreciation under Alternative Methods...Ch. 9 - Computing Depreciation under Alternative Methods...Ch. 9 - Prob. 9.8ECh. 9 - Demonstrating the Effect of Book Value on...Ch. 9 - Prob. 9.10ECh. 9 - Prob. 9.11ECh. 9 - Prob. 9.12ECh. 9 - Prob. 9.13ECh. 9 - Prob. 9.14ECh. 9 - Computing Depreciation and Book Value for Two...Ch. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Prob. 9.2CPCh. 9 - Analyzing and Recording Long-Lived Asset...Ch. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Recording and Interpreting the Disposal of...Ch. 9 - Prob. 9.3PACh. 9 - Prob. 9.4PACh. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Recording and Interpreting the Disposal of...Ch. 9 - Analyzing and Recording Long-Lived Asset...Ch. 9 - Prob. 9.4PBCh. 9 - Accounting for Operating Activities (Including...Ch. 9 - Prob. 9.1SDCCh. 9 - Prob. 9.2SDCCh. 9 - Ethical Decision Making: A Mini-Case Assume you...Ch. 9 - Critical Thinking: Analyzing the Effects of...Ch. 9 - Prob. 9.7SDCCh. 9 - Accounting for the Use and Disposal of Long-Lived...
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