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Ac116 Week 4 Wiley

Ac116 Week 4 Wiley

Daniel Kevins

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Problem 10-2A

In recent years, Sonya Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information concerning the buses is summarized below.

Bus	Acquired	Cost	Salvage Value	Useful Life in Years	Depreciation Method
1	1/1/10	$ 111,400	$ 7,300	5	Straight-line
2	1/1/10	224,000	11,100	4	Declining-balance
3	1/1/11	75,895	8,300	5	Units-of-activity

For the declining-balance method, the company uses the double-declining rate. For the units-ofactivity method, total miles are expected to be 122,900 . Actual miles of use in the first 3 years were: 2011, 23,400 ; 2012, 33,300 ; and 2013, 31,900 .

(a1)

Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. $0.50.)

Depreciation expense per mile

[removed]

per mile

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Problem 10-7A

The intangible assets section of Centaur Company at December 31, 2012, is presented below.

Patents ($70,000 cost less $7,000 amortization)		$63,000
Franchises ($43,900 cost less $17,560 amortization)		26,340
Total		$89,340

The patent was acquired in January 2012 and has a useful life of 10 years. The franchise was acquired in January 2009 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2013.

Jan. 2		Paid $37,980 legal costs to successfully defend the patent against infringement by another company.
Jan.–June		Developed a new product, incurring $143,270 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1		Paid $51,220 to an extremely large defensive lineman to appear in commercials advertising the company’s products. The commercials will air in September and October.
Oct. 1		Acquired a franchise for $116,000. The franchise has a useful life of 50 years.

(a) and (b)

(a) Prepare journal entries to record the transactions above. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
Jan.–June	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
Sept. 1	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
Oct. 1	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]

(b) Prepare journal entries to record the 2013 amortization expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
	(To record patents amortisation.)
Dec. 31	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
	(To record franchise amortisation.)