et hepfu Problems For Ryder Ltd for the financial year 1 January to 31 December 2009, record all necessary journal entries relating to the selected events described. Use generally accepted accounting principles. The records are still open on 31 December 2009. 1. On 2 January, Ryder Ltd granted certain executives options to purchase 10 000 shares of its ordinary share capital at $180 per share in exchange for services to be performed over the next 3 years. The quoted market price of the shares on 2 January was $175 per share. The executives believe that the market price is likely to rise to $250 per share over the next 3 years. 2. On 1 July, Ryder Ltd acquired a patent on a product with a remaining legal life of 15 years. The estimated economic life of the patent on the acquisition date was eight years. The cost of the patent was $64 000. 3. Ryder Ltd developed a process in 2009 on which it received a patent on 1 October. In 2011, developmental costs of the process amounted to $140 000. Legal fees to obtain the patent were $13 600. Ryder Ltd decided that the legal life of 20 years approximated its economic life. PROBIFM 10.1 4. In December 2009. Ryder Ltd acquired all the shares of Victorian Communications Ltd, publisher of the Victorian News. The excess of cost over the fair value of the net assets of the company was $80 000. This amount of goodwill was attributable to the newspaper's established circulation list, the editorial reference library. established news development resources, community loyalty and established advertising clients. The censolidated financial statements do not include any impairment of the goodwill. 5. Ryder Ltd acquired five heavy trucks in 2007 for $35 000 each. Based on a 5-year study, it was decided that the total kilemetres driven for each truck over its useful life of 5 years would be 200 000 km. The residual value of each was estimated to be $5000. The company decided to use the units-of-service (output) method for the trucks in determining depreciation. The actual total kilometres driven for the five trucks in 2000 were 120000 km. Other equipment which was purchased in 2007 with an original cost of $5 000 000 is being depreciated by the straight-line method over a useful life of 10 years No residual value is expected. Because of a labour dispute, the plant was shut down between 1 August and 30 October. The equipment and trucks were not used during that time. 6. Ryder Ltd had the exterio: of its office building painted in November. The cost was $20000. 7. An unusual storm, which Ryder Ltd believes is not likely to recas in the foceseeable future, occurred in February. The storm caused extensive damage to the offhice building. The loss was $50 000. This amouni is over and above the amount received from the insurance company. 8. On 1 January 2007, Ryder Ltd acquired a warehouse at a cost of $150 000. The company adopted the straight-line method of depreciation and has been recording depreciation over an estimated economic life of 10 years with no residual value. At the beginning of 2009, a decision was made to adopt the diminishing-balance method of depreciation for the warehouse. Due to an oversight, however, the straight-line method was used for 2009. 9. A lawsuit against the company which was initiated in 2008 was settled out of court. Ryder Ltd paid the plaintiff $125 000. 10. Ryder Ltd acquired its factory building on 2 January 1999 for $300 000. At that time the useful life was estimated to be 20 years. At the beginning of 2009, it was decided that the useful life on the acquisition date should have been 30 years. 11. From September 2009 to December 2009, one of the company's major products was advertised on television. The cost of these one-minute commercials was $200 000. The company experienced a dramatic increase in the sale of this product. It is believed that the larger amount of sales will continue indefinitely because the commercials have made the product better known to the public 12. Ryder Ltd sells a product with a one-year warranty. On 31 December 2009, the company estimated that the cost of repairs for the items sold in 2009 but to be returned for repairs in 2012 would be $68 000. 13. In October, Ryder Ltd agreed to purchase 7500 tonnes of material in 2010 at the fixed price of $100 per tonne. The contract is not subject to cancellation. On 31 December 2009, the replacement cost of the materials was $88 per tonne CHAPTER 10 Expenses 351 14. One of Ryder Ltd's divisions is in the construction business. The following information relates to one of its projects, started in 2009: $520 000 Total contract price 350 000 Billings 424 000 Costs incurred Estimated additionai costs to complete the project 106 000 The division uses the completed contract method. 15. Ryder Ltd acquired a new machine by trading in a similar machine. The old machine originally cost $90 000 and had accumulated depreciation of $20 000 at the date of exchange. The new nachine cculd have been purchased for $50 000 cash. Ryder Ltd received $5000 aiso on the exchange 16. Ryder Ltd has just learned that one of its customers, Dayton Ltd, has declared bankruptcy. Dayton Ltd owes $60 000 to Ryder Ltd. it dces not appear that Ryder Ltd will receive anything. This amount constitutes 40% of the ending balance of Accounts Receivable. 17. One of Ryder Ltd's divisions received a donation consisting of 3 hectares of land with an old building on it. The intention is for the company to build a manufacturing plant on the land. On 2 January 2009, when the compary took title to the property, the appraised value of the land was $3 00 G00 and of the building was $100 000. The building's useful ife at that time was 10 years. The company is using the building for the storage of a variety of items. et hepfu Problems For Ryder Ltd for the financial year 1 January to 31 December 2009, record all necessary journal entries relating to the selected events described. Use generally accepted accounting principles. The records are still open on 31 December 2009. 1. On 2 January, Ryder Ltd granted certain executives options to purchase 10 000 shares of its ordinary share capital at $180 per share in exchange for services to be performed over the next 3 years. The quoted market price of the shares on 2 January was $175 per share. The executives believe that the market price is likely to rise to $250 per share over the next 3 years. 2. On 1 July, Ryder Ltd acquired a patent on a product with a remaining legal life of 15 years. The estimated economic life of the patent on the acquisition date was eight years. The cost of the patent was $64 000. 3. Ryder Ltd developed a process in 2009 on which it received a patent on 1 October. In 2011, developmental costs of the process amounted to $140 000. Legal fees to obtain the patent were $13 600. Ryder Ltd decided that the legal life of 20 years approximated its economic life. PROBIFM 10.1 4. In December 2009. Ryder Ltd acquired all the shares of Victorian Communications Ltd, publisher of the Victorian News. The excess of cost over the fair value of the net assets of the company was $80 000. This amount of goodwill was attributable to the newspaper's established circulation list, the editorial reference library. established news development resources, community loyalty and established advertising clients. The censolidated financial statements do not include any impairment of the goodwill. 5. Ryder Ltd acquired five heavy trucks in 2007 for $35 000 each. Based on a 5-year study, it was decided that the total kilemetres driven for each truck over its useful life of 5 years would be 200 000 km. The residual value of each was estimated to be $5000. The company decided to use the units-of-service (output) method for the trucks in determining depreciation. The actual total kilometres driven for the five trucks in 2000 were 120000 km. Other equipment which was purchased in 2007 with an original cost of $5 000 000 is being depreciated by the straight-line method over a useful life of 10 years No residual value is expected. Because of a labour dispute, the plant was shut down between 1 August and 30 October. The equipment and trucks were not used during that time. 6. Ryder Ltd had the exterio: of its office building painted in November. The cost was $20000. 7. An unusual storm, which Ryder Ltd believes is not likely to recas in the foceseeable future, occurred in February. The storm caused extensive damage to the offhice building. The loss was $50 000. This amouni is over and above the amount received from the insurance company. 8. On 1 January 2007, Ryder Ltd acquired a warehouse at a cost of $150 000. The company adopted the straight-line method of depreciation and has been recording depreciation over an estimated economic life of 10 years with no residual value. At the beginning of 2009, a decision was made to adopt the diminishing-balance method of depreciation for the warehouse. Due to an oversight, however, the straight-line method was used for 2009. 9. A lawsuit against the company which was initiated in 2008 was settled out of court. Ryder Ltd paid the plaintiff $125 000. 10. Ryder Ltd acquired its factory building on 2 January 1999 for $300 000. At that time the useful life was estimated to be 20 years. At the beginning of 2009, it was decided that the useful life on the acquisition date should have been 30 years. 11. From September 2009 to December 2009, one of the company's major products was advertised on television. The cost of these one-minute commercials was $200 000. The company experienced a dramatic increase in the sale of this product. It is believed that the larger amount of sales will continue indefinitely because the commercials have made the product better known to the public 12. Ryder Ltd sells a product with a one-year warranty. On 31 December 2009, the company estimated that the cost of repairs for the items sold in 2009 but to be returned for repairs in 2012 would be $68 000. 13. In October, Ryder Ltd agreed to purchase 7500 tonnes of material in 2010 at the fixed price of $100 per tonne. The contract is not subject to cancellation. On 31 December 2009, the replacement cost of the materials was $88 per tonne CHAPTER 10 Expenses 351 14. One of Ryder Ltd's divisions is in the construction business. The following information relates to one of its projects, started in 2009: $520 000 Total contract price 350 000 Billings 424 000 Costs incurred Estimated additionai costs to complete the project 106 000 The division uses the completed contract method. 15. Ryder Ltd acquired a new machine by trading in a similar machine. The old machine originally cost $90 000 and had accumulated depreciation of $20 000 at the date of exchange. The new nachine cculd have been purchased for $50 000 cash. Ryder Ltd received $5000 aiso on the exchange 16. Ryder Ltd has just learned that one of its customers, Dayton Ltd, has declared bankruptcy. Dayton Ltd owes $60 000 to Ryder Ltd. it dces not appear that Ryder Ltd will receive anything. This amount constitutes 40% of the ending balance of Accounts Receivable. 17. One of Ryder Ltd's divisions received a donation consisting of 3 hectares of land with an old building on it. The intention is for the company to build a manufacturing plant on the land. On 2 January 2009, when the compary took title to the property, the appraised value of the land was $3 00 G00 and of the building was $100 000. The building's useful ife at that time was 10 years. The company is using the building for the storage of a variety of items