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intermediate accounting questions

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Question;P9-28A;(p.517):Capitalized asset cost and first year depreciaton, and identifying;depreciation results that meet management objectives;On January 9, 2010, Swifty Delivery Service;purchased a truck at cost of $67,000. Before placing the truck in service;Swifty spent $2,200 painting it, $500 replacing tires, and $5,000 overhauling;the engine. The truck should remain in service for 6 years and have a residual;value of $14,700. The truck's annual mileage is expected to be 15,000 miles in;each of the first 4 years and 10,000 miles in each of the next 2 years--80,000;miles in total. In deciding, which depreciation method to use, Jerry Speers, the;general manager, requests a depreciation schedule for each of the depreciation;methods (straight line, units of production, and double declining balance).;Requirements;1. Prepare a depreciation schedule for each;depreciation method, showing asset cost, depreciation expense, accumulated;depreciation, and asset book value.;2. Swifty prepares financial statements using the;depreciation method that reports the hightest net income in the early years of;asset use. For income tax purposes, the company uses the depreciation method;that minimizes income taxes in the early years. Consider the first year that;Swifty uses the truck. Identify the depreciation methods that meet the general;managers objectives, assuming the income tax authorities permit the use of any;of the methods.P10A-9B: p.586 -Calculating present valueCalculating present valueAxel needs new manufacturing equipment. Two companies can provide similar equipment but under different payment plans:Plan A: MRE offers to let Axel pay $35,000 each year for five years. The payments include interest at 12% per year.Plan B: Westernhome will let Axel make a single payment of $42,000 at the end of five years. This payment includes both principal and interest at 12%.Requirements:1. Calculate the present value of Plan A.2. Calculate the present value of Plan B.3. Axel will purchase the equipment that costs the least, as measured by present value. Which equipment should Axel select? Why?Additional Requirements;P11-29A p. 631: Analyzing the;stockeholders equity section of the balance sheet;The balance sheet of Ballcraft, Inc.;reported the following;Preferred stock, $6 par, 6%;5,000 shares authorized and issued..................................... $30,000;Common stock, $4.00 par value, 45,000 shares;authorized;10,000 shares issued......................................... $40,000;Additional paid-in-capital-common........................ $219,000;Total paid-in-capital.................................................. $289,000;Retained earnings....................................................;$90,000;Total stockholder's equity......................................... $379,000;Preferred dividends are in arrears for two years;including the current year. On the balance sheet date, the market value of the;Ballcraft common stock was $31 per share.;Requirements;1. Is the preferred stock cumulative or;noncumulative? How can you tell?;2. What is the total paid-in-capital of the;company?;3. What was the total market value of the common;stock?;4. Compute the book value per share of the common;stock.

 

Paper#43501 | Written in 18-Jul-2015

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