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Chapter $10$ Graded Assignment Problems...

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Chapter $10$ Group Assignment Problems

E$10\mathrm{.}4$B

Wynn Furnace Corp. purchased machinery for $$345,000$ on May $1,2025.$ It is estimated that it will have a useful life of $10$ years, scrap value of $$45,000,$ production of $120,000$ units, and working hours of $12,500.$ During $2026$ Wynn uses the machinery for $2,000$ hours, and the machinery produces $25,000$ units.

Instructions

From the information given, compute the depreciation charge for $2026$ under each of the following methods: $($Round to three decimal places$).$

a$.$ Straight$-$line.

b$.$ Units$-$of$-$output.

c$.$ Working hours.

d$.$ Declining$-$balance. $($Use $20\%$ as the annual rate.$)$

E$10\mathrm{.}18$B

The management of Yastrzemski Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $$1,200,000$ with depreciation to date of $$300,000$ as of December $31,2025.$ On December $31,2025,$ management projected its future net cash flows from this equipment to be $$700,000$ and its fair value to be $$600,000.$ The company intends to use this equipment in the future.

Instructions

a$.$ Prepare the journal entry $($if any$)$ to record the impairment at December $31,2025.$

b$.$ Where should the gain or loss $($if any$)$ on the write$-$down be reported in the income statement?

c$.$ At December $31,2026,$ the equipment's fair value increased to $$700,000.$ Prepare the journal entry $($if any$)$ to record this increase in fair value.

E$10\mathrm{.}21$B

Fisk Company owns a $8,000-$acre tract of timber purchased in $2011$ at a cost of $$1,500$ per acre. At the time of purchase the

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Chapter $10$ Graded Assignment Problems...

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reported in the income statement?

c$.$ At December $31,2026,$ the equipment's fair value increased to $$700,000.$ Prepare the journal entry $($if any$)$ to record this increase in fair value.

E$10\mathrm{.}21$B

Fisk Company owns a $8,000-$acre tract of timber purchased in $2011$ at a cost of $$1,500$ per acre. At the time of purchase the land was estimated to have a value of $$500$ per acre without the timber. Fisk Company has not logged this tract since it was purchased. In $2025,$ Fisk had the timber cruised. The cruise $($appraiser$)$ estimated that each acre contained $5,000$ board feet of timber. In $2025,$ Fisk built $10$ miles of roads at a cost of $$8,000$ per mile. After the roads were completed, Fisk logged and sold $3,500$ trees containing $1,000,000$ board feet.

Instructions

a$.$ Determine the cost of timber sold related to depletion for $2025.$

b$.$ If Fisk depreciates the logging roads on the basis of timber cut, determine the depreciation expense for $2025.$

c$.$ If Fisk plants five seedlings at a cost of $$2$ per seedling for each tree cut, how should Fisk treat the reforestation?

E$10\mathrm{.}24$B

The $2025$ Annual Report of Brinker International contains the following information: $($in millions$)$

June $29,2025$

June $27,2024$

Total assets $,$$$1,484$

Total liabilities

$$1,436$

Net sales $2,761,2,820$

Net income

$141$

$138$

Instructions

Compute the following ratios for Brinker International for $2025$:

a$.$ Asset turnover ratio.

b$.$ Rate of return on assets.

c$.$ Profit margin on sales.

d$.$ How can the asset turnover ratio be used to compute the rate of return on assets?

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