devry acct305 week 3 homework

Week Three – Homework Exercises E11-1, E11-6, E11-11,
E11-14, and E11-20
Brief Execrise BE11-10, BE11-16

E11-1 On January 1,
2013, the Excel Delivery Company purchased a delivery van for $33,000. At the
end of its five-year service life, it is estimated that the van will be worth
$3,000. During the five-year period, the company expects to drive the van
100,000 miles.

Required: Calculate
annual depreciation for the five-year life of the van using each of the
following methods. Round all computations to the nearest dollar.

E11-6 On April 29,
2013, Quality Appliances purchased equipment for $260,000. The estimated
service life of the equipment is six years and the estimated residual value is
$20,000. Quality’s fiscal year ends on December 31.

Required: Calculate
depreciation for 2013 and 2014 using each of the three methods listed. Quality
calculates partial year depreciation based on the number of months the asset is
in service. Round all computations to the nearest dollar.

1.
Straight line
2.
Sum-of-the-years’ digits
3.
Double-declining balance

E11-11 On April 17,
2013, the Loadstone Mining Company purchased the rights to a coal mine. The
purchase price plus additional costs necessary to prepare the mine for
extraction of the coal totaled $4,500,000. The company expects to extract
900,000 tons of coal during a four-year period. During 2013, 240,000 tons were
extracted and sold immediately.

Required: 1.
Calculate depletion for 2013
2.
Discuss the accounting treatment of the depletion calculated in requirement 1.

4,500,000/900,000
1. Calculate depletion for 2013
1,200,000
2. Discuss the accounting treatment of the depletion
calculated in requirement 1.

E11-14 Janes Company
provided the following information on intangible assets:

a. A patent was
purcahsed from the Lou Company for $700,000 on January 1, 2011.
Janes estimated the remaining useful life of the patent to
be 10 years. The patent was
carried on Lou’s accounting records at a net book value of
$350,000 when Lou sold it to
Janes.

b. During 2013,
a franchise was purchased from the Rink Company for $500,000. The
contractual life of the franchise is 10 years and Janes
records a full year of amortization in
the year of purchase.

c. Janes
incurred research and development costs in 2013 as follows:
Material and supplies $140,000
Personnel 180,000
Indirect cost 60,000
Total 380,000

d. Effective January
1, 2013, based on new events that have occurred, Janes estimates
that the remaining life of the patent purchased from Lou is
only five more years.

Required: 1.
Prepare the entries necessary for years 2011 through 2013 ro reflect the above
information.
2.
Prepare a schedule showing the intangible asset section of Janes’s December 31,
2013, balance sheet.

E11-20 For financial
reporting, Clinton Poultry Farms has used the declining-balance method of
depreciation for conveyor equipment acquired at the beginning of 2010 for
$2,560,000. Its useful life was estimated to be six years, with a $160,000
residual value. At the beginning of 2013, Clinton decides to change to the
straight-line method. The effect of this change on depreciation for each year
is as follows:

($
in 000s)
Year Straight Line Declining Balance Difference
2010 $400 $853
$453
2011 400 569 $169
2012 400 379 ($21)
$1,200
$1,801 $601

Required: 1. Briefly describe the way Clinton should
report this accouting change in the 2010-2011 comparative financial statement
2. Prepare any 2011 journal entry related to the
change.

BE11-10 Collison
and Ryder Company (C&R) has been experiencing declining market conditions
for its sportswear division. Management decided to test the assets of the
division for possible impairment. The test revealed the following: book value
of division’s assets, $26.5 million; fair value of division’s assets, $21
million; sum of estimated future cash flows generated from the division’s
assets, $28 million. What amount of impairment loss should C&R recognize?

BE11-16 Demmert
Manufacturing incurred the following expenditures during the current fiscal
year: annual maintenance on its machinery, $5,400; remodeling of offices,
$22,000; rearrangement of the shipping and receiving area resulting in an
increase in productivity, $35,000; addition of a security system to the
manufacturing facility, $25,000. How should Demmert account for each of these
expenditures?

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