accounting

Project Description:

classifying leases pe 9-11
which one of the following characteristics of a lease would not cause the lease to be classified as a capital lease?
a) lease ownership transfers to the lessee at the end of the lease.
b) the present value of the lease payments at the beginning of the lease is 90% or more of the fair market value of the leased asset.
c) the lease term is equal to 50% of the estimated economic life of the asset.
d) the lease contains a bargain purchase option.

straight-line method of depreciation 9-14
using the following data and the straight-line method of depreciation, compute depreciation expense and make the necessary journal entry to record depreciation expense for the first year.
cost of machine ……………………………………………………… $ 1,000,000
estimate useful life (year) …………………………………………… 8 years
salvage value ………………………………………………………… 40,000
estimate useful life (units) .………………………………………… $ 1,600,000
units produced during the first year …………………………………. 180,000
units-of-production method of depreciation pe 9-15
refer to the data in pe 9-14. using the units-of-production method depreciation, compute depreciation expense and make the necessary journal entry to record depreciation expense for the first year.
partial-year depreciation calculations pe 9-16
on september 30, hoagland company purchased a $34,000 delivery truck. the company estimates the truck will last six years and have a salvage value of $4,000 at the end of six years. using the straight-line method of depreciation, compute the amount of depreciation in the first two years of the truck’s service.
units-of-production method with natural resources 9-17
muriel company purchased an oil field for $4,200,000 cash. the oil field contains an estimated 600,000 barrels of oil. during the first year of operation, the company extracts and sells 70,000 barrels of oil. compute the amount of depletion expense, and make the necessary journal entry to record depletion expense for the year.

interest capitalization e9-32
litton company is constructing a new office building. costs of the building are as follows:
wages paid to construction workers…………………………………….. $ 185,000
building materials purchased……………………………………………. 456,000
interest expense on construction loan…………………………………… 13,800
interest expense on mortgage loan during the…………………………….
first year subsequent to the building’s completion………………… 22,000

accounting for the acquisition of assets-basket purchase e9-33
warbler corporation purchased land, a building, and equipment for a total cost of $625,000. after the purchase, the property was appraised. fair values were determined to be $245,000 for the land, $350,000 for the building, and $105,000 for the equipment. given these appraisals, record the purchase of the property by warbler.
disposal of an asset e9-40
aeronautics company purchased a machine for $115,000. the machine has an estimated useful life of eight years and a salvage value of $7,000. journalize the disposal of the machine under each of the following conditions. (assume straight-line depreciation.)
1. sold the machine for $97,000 cash after two years.
2. sold the machine for $36,000 cash after five years.

intangible assets e9-42

on january 1, 2012, landon company purchased a patent for $250,000 to allow it to improve its product line. on july 1, 2011, landon purchased another existing business in a nearby city for a total cost of $750,000. the market value of the land, building, equipment, and other tangible assets was $550,000. the excess $200,000 was recorded as goodwill.
1. the purchase of the patent on january 1, 2011.
2. the amortization of the patent at december 31, 2011.
3. under what conditions goodwill would be amortized on the books of landon.



fix asset turnover e9-44

fitzgerald’s emporium reported the following asset values in 2011 and 2012: in additional, fitzgerald’s had sales of $3,650,000 in 2012. cost of goods sold for the year was $2,300,000. compute fitzgerald’s fixed asset turnover radio for 2012.

2012 2011
-------------------------------------------------------------------------------------------------------
cash ………………………………. 63,000 $ 48,000
accounts receivable ………………. 605,000 490,000
inventory ………………………….. 560,000 520,000
land ………………………………. 350,000 310,000
building …………………………… 740,000 680,000
equipment …………………………. 140,000 120,000
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