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ACC 422 Week 4 WileyPlus Assignment - Exercises

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ACC422 Week 4 E11-4 P11-6 E12-16 P12-1;Intermediate Acc. 13e;E11-4 (Depreciation Computations?Five Methods) Wenner Furnace Corp. purchased machinery for $279,000 on May 1, 2010. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 240,000 units, and working hours of 25,000. During 2011 Wenner Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units.;Instructions;From the information given, compute the depreciation charge for 2011 under each of the following;methods. (Round to the nearest dollar.);(a) Straight-line.;(b) Units-of-output.;(c) Working hours.;(d) Sum-of-the-years?-digits.;(e) Double-declining-balance.;P11-6 (Depletion, Timber, and Extraordinary Loss) Conan O?Brien Logging and Lumber Company owns 3,000 acres of timberland on the north side of Mount Leno, which was purchased in 1998 at a cost of $550 per acre. In 2010, O?Brien began selectively logging this timber tract. In May of 2010, Mount Leno erupted, burying the timberland of O?Brien under a foot of ash. All of the timber on the O?Brien tract was downed. In addition, the logging roads, built at a cost of $150,000, were destroyed, as well as the logging equipment, with a net book value of $300,000.;At the time of the eruption, O?Brien had logged 20% of the estimated 500,000 board feet of timber.;Prior to the eruption, O?Brien estimated the land to have a value of $200 per acre after the timber was;harvested. O?Brien includes the logging roads in the depletion base.;O?Brien estimates it will take 3 years to salvage the downed timber at a cost of $700,000. The timber;can be sold for pulp wood at an estimated price of $3 per board foot. The value of the land is unknown;but must be considered nominal due to future uncertainties.;Instructions;(a) Determine the depletion cost per board foot for the timber harvested prior to the eruption of Mount;Leno.;(b) Prepare the journal entry to record the depletion prior to the eruption.;(c) If this tract represents approximately half of the timber holdings of O?Brien, determine the;amount of the extraordinary loss due to the eruption of Mount Leno for the year ended;December 31, 2010.;E12-16 (Accounting for R&D Costs) Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2009 the company expends $325,000 on a research project, but by the end of 2009 it is impossible to determine whether any benefit will be derived from it.;Instructions;(a) What account should be charged for the $325,000, and how should it be shown in the financial;statements?;(b) The project is completed in 2010, and a successful patent is obtained. The R&D costs to complete the project are $130,000. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2010 total $24,000. The patent has an expected useful life of 5 years. Record;these costs in journal entry form. Also, record patent amortization (full year) in 2010.;(c) In 2011, the company successfully defends the patent in extended litigation at a cost of $47,200;thereby extending the patent life to December 31, 2018. What is the proper way to account for this;cost? Also, record patent amortization (full year) in 2011.;(d) Additional engineering and consulting costs incurred in 2011 required to advance the design of a;product to the manufacturing stage total $60,000. These costs enhance the design of the product;considerably. Discuss the proper accounting treatment for this cost.;P12-1 (Correct Intangible Asset Account) Reichenbach Co., organized in 2009, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2009 and 2010.;Intangible Assets;7/1/09 8-year franchise, expiration date 6/30/17 $ 48,000;10/1/09 Advance payment on laboratory space (2-year lease) 24,000;12/31/09 Net loss for 2009 including state incorporation fee, $1,000;and related legal fees of organizing, $5,000 (all fees;incurred in 2009) 16,000;1/2/10 Patent purchased (10-year life) 84,000;3/1/10 Cost of developing a secret formula (indefinite life) 75,000;4/1/10 Goodwill purchased (indefinite life) 278,400;6/1/10 Legal fee for successful defense of patent purchased above 12,650;9/1/10 Research and development costs 160,000;Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. (List multiple deb/credit entries from largest to smaller amount, e.g. 10,5, 2)

 

Paper#81031 | Written in 18-Jul-2015

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