Week 2 WileyPLUS
P8-3A BE9-11 DO IT! 9-5 E9-7 E9-8 BYP 9-1 BYP 9.2 P9-2A
Brief Exercise 9-11 Suppose Nike, Inc. reported the following plant
assets and intangible assets for the year ended May 31, 2014 (in millions):
other plant assets $909.1; land $219.7; patents and trademarks (at cost)
$525.2; machinery and equipment $2,115.0; buildings $955; goodwill (at cost)
$199.2; accumulated amortization $49.3; and accumulated depreciation $2,228.
Prepare a partial balance sheet for Nike for these items.
Do It! Review 9-5
Match the statement with the term most directly associated with it.
1. Rights, privileges, and competitive advantages that result from the
ownership of long-lived assets that do not possess physical substance.
2. The allocation of the cost of an intangible asset to expense in a
rational and systematic manner.
3. A right to sell certain products or services, or use certain
trademarks or trade names within a designated geographic area.
4. Costs incurred by a company that often lead to patents or new
products. These costs must be expensed as incurred.
5. The excess of the cost of a company over the fair value of the net
assets required.
E9-7 Wang Co. has delivery equipment that cost $53,220 and has been
depreciated $24,560.
Record entries for the disposal under the following assumptions.
(a) It
was scrapped as having no value.
(b) It
was sold for $37,390.
(c) It
was sold for $19,530.
E9-8 Here are selected 2014 transactions of Cleland Corporation.
Jan. 1 Retired a piece of machinery that was purchased on January 1,
2004. The machine cost $61,860 and had a useful life of 10 years
with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2012. The
computer cost $35,600 and had a useful life of 4 years with no
salvage value. The computer was sold for $4,080 cash.
Dec. 31 Sold a delivery truck for $9,010 cash. The truck cost
$24,280 when it was purchased on January 1, 2011, and was depreciated
based on a 5-year useful life with a $3,370 salvage value.
Journalize all entries required on the above dates, including entries to
update depreciation on assets disposed of, where applicable. Cleland
Corporation uses straight-line depreciation.
BYP 9-1 Tootsie Roll
Broadening Your Perspective 9-1
The financial statements of Tootsie Roll are
presented below.
What were the total cost and book value of property, plant, and
equipment at December 31, 2011? (Enter the amounts in thousands.)
Total
cost
Book
value
What was the amount of depreciation expense for each of the 3 years
2009–2011? (Hint: Use the statement of cash flows.) (Enter the amounts in thousands.)
Depreciation
2009
2010
2011
Using the statement of cash flows, what are the amounts of property,
plant, and equipment purchased (capital expenditures) in 2011 and 2010? (Enter the amounts in thousands.)
Broadening Your Perspective 9-2
Based on the information in these financial statements and the
accompanying notes and schedules, compute the following values for each company
in 2011.
(1) Return on assets.
(2) Profit margin (use “Total Revenue”).
(3) Asset turnover.
P9-2A At December 31, 2014, Navaro Corporation reported the following
plant assets.
Land $ 4,473,000
Buildings $30,940,000
Less:
Accumulated depreciation—buildings 17,780,175 13,159,825
Equipment 59,640,000
Less:
Accumulated depreciation—equipment 7,455,000 52,185,000
Total
plant assets $69,817,825
During 2015, the following selected cash transactions occurred.
Apr. 1 Purchased land for $3,280,200.
May 1 Sold equipment that cost $894,600 when purchased on
January 1, 2008. The equipment was sold for $253,470.
June 1 Sold land for $2,385,600. The land cost $1,491,000.
July 1 Purchased equipment for $1,640,100
Dec. 31 Retired equipment that cost $1,043,700 when purchased
on December 31, 2005. No salvage value was received.
Journalize the transactions. Navaro uses straight-line depreciation for
buildings and equipment. The buildings are estimated to have a 40-year
useful life and no salvage value; the equipment is estimated to have
a 10-year useful life and no salvage value. Update depreciation on assets
disposed of at the time of sale or retirement.
Record adjusting entries for depreciation for 2015.
Prepare the plant assets section of Navaro’s balance sheet at December
31, 2015. (Hint: You may wish to set up T accounts, post beginning
balances, and then post 2015 transactions.)
Presented below is an aging schedule for Bosworth Company.
P8-3A Presented below is an aging schedule for Bosworth
Company.
Number of Days Past Due
Customer Total Not
Yet Due 1–30 31–60 61–90 Over 90
Aneesh $ 26,000 $ 11,000 $15,000
Bird 46,500 $ 46,500
Cope 64,500 7,500 8,200 $48,800
DeSpears 40,600 $40,600
Others 131,000 82,400 34,700 13,900
$308,600 $136,400 $53,900 $28,900 $48,800 $40,600
Estimated
percentage uncollectible
3% 8% 11% 20% 63%
Total
estimated bad debts
$ 46,921 $ 4,092 $4,312 $3,179 $ 9,760 $25,578
At December 31, 2013, the unadjusted balance in Allowance for Doubtful
Accounts is a credit of $7,200.
SOLUTION PREVIEW
Jan. 1 Accumulated
Depreciation—Machinery 61,860
Machinery 61,860
June 30 Depreciation
Expense 4,450
Accum.
Depreciation—Computer
($35,600
X 1/4 X
6/12) 4,450
