A three-year-old machine has a cost of $31,000, an estimated residual value

| October 3, 2018

A three-year-old machine has a cost of $31,000, an estimated
residual value of $1,000, and an estimated useful life of five years. The
company uses straight-line depreciation.

Calculate the net book
value at the end of the third year.(Omit the “$” sign in your response.)

Net book
value

$

A three-year-old machine has a cost of $45,000, an estimated
residual value of $5,000, and an estimated useful life of four years. The
company uses double-declining-balance depreciation.

Calculate the net book
value at the end of each year.(Round your answers to the nearest dollar amount. Do not round
your intermediate calculations. Omit the “$” sign in your
response.)

First year

Second year

Third year

Net book
value

$

$

$

A three-year-old machine has a cost of $21,000, has an estimated
residual value of $1,000 and an estimated useful life of 40,000 machine
hours. The company uses units-of-production depreciation and ran the
machine 3,200 hours in year 1; 7,050 hours in year 2; and 7,500 hours in year
3.

Calculate the net book
value at the end of the third year.(Do not round your intermediate calculations.
Omit the “$” sign in your response.)

Net book
value

$

Purity Ice Cream Company bought a new ice cream maker at the
beginning of the year at a cost of $12,000. The estimated useful life was
four years, and the residual value was $960. Assume that the estimated
productive life of the machine was 9,200 hours. Actual annual usage was 3,680
hours in year 1; 2,760 hours in year 2; 1,840 hours in year 3; and 920 hours
in year 4.

Required:

1.

Complete a separate
depreciation schedule for each of the alternative methods.(Round your answers to
the nearest dollar amount. Omit the “$” sign in your response.)

a.

Straight-line.

Year

Depreciation
Expense

Accumulated
Depreciation

Net
Book Value

At acquisition

$

1

$

$

2

3

4

b.

Units-of-production (use
four decimal places for the per unit output factor).

Year

Depreciation
Expense

Accumulated
Depreciation

Net
Book Value

At acquisition

$

1

$

$

2

3

4

c.

Double-declining-balance.

Year

Depreciation
Expense

Accumulated
Depreciation

Net
Book Value

At acquisition

$

1

$

$

2

3

4

Cheshire Company had
three intangible assets at the end of 2011 (end of the accounting year):

a.

A copyright purchased on January 1, 2011, for a cash cost of
$12,300. The copyright is expected to have a 10-year useful life to Cheshire.

b.

Goodwill of $65,000 from the purchase of the Hartford Company on
July 1, 2010.

c.

A patent purchased on January 1, 2010, for $39,200. The inventor
had registered the patent with the U.S. Patent Office on January 1, 2006.

Required:

1.

Compute the
acquisition cost of each intangible asset.(Omit the “$” sign in your response.)

Acquisition cost

Copyright

$

Goodwill

Patent

2.

Compute the amortization of each intangible at December 31,
2011. The company does not use contra-accounts. (Assume the company uses
straight-line method)(Leave no cells blank – be certain to enter “0” wherever
required. Omit the “$” sign in your response.)

Amortization

Copyright

$

Goodwill

Patent

3.

Show how these assets and any related expenses should be
reported on the balance sheet and income statement for 2011. (Assume there
has been no impairment of goodwill.)(Omit the “$” sign in your response.)

Income
statement for 2011:

Operating
expenses:

$

Balance
sheet at December 31, 2011:

(under
noncurrent assets)

Intangibles:

$

$

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