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ACC - P22-6, Madrasa Inc

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Question;On December 31, 2010, before the books were closed, the management and accountants of Madrasa Inc. made the following determinations about three depreciable assets." 1. Depreciable asset A was purchased January 2, 2007. It originally cost _____________ and, for depreciation purposes, the straight-line method was originally chosen. The asset was originally expected to be useful for _________ years and have a zero salvage value. In 2010, the decision was made to change the depreciation method from straight-line to sum-of-years'-digits, and the estimates relating to useful life and salvage value remained unchanged. 2. Depreciable asset B was purchased January 3, 2006. It originally cost and, for depreciation purposes, the straight-line method was chosen. The asset was originally expected to be useful for ______ years and have a zero salvage value. In 2010, the decision was made to shorten the total life of this asset to ____ years and toestimate the salvage value at ____________ 3. Depreciable asset C was purchased January 5, 2006. The asset's original cost was ____________and this amount was entirely expensed in 2006. This particular asset has a 10-year useful life and no salvage value. The straight-line method was chosen for depreciation purposes. Additional data: 1. Income in 2010 before depreciation expense amount to ____________ 2. Depreciation expense on assets other than A, B, and C totaled _________ in 2010.3. Income in 2009 was reported at ___________ 4. Ignore all income tax effects. 5. ____________ shares of common stock were outstanding in 2009 and 2010. Instructions: (a) Prepare all necessary entries in 2010 to record these determinations. (b) Prepare comparative retained earnings statements for Madrasa Inc. for 2009 and 2010. The company had retained earnings of_________at December 31, 2008.

 

Paper#44553 | Written in 18-Jul-2015

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