Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 4, Problem 4.4E
a.
To determine
Introduction: Consolidation is the merger or acquisition of small companies into a single large one. In financial accounting, consolidation means an aggregation of financial statements of a group company/different entities and reported at the group level.
To prepare:
b.
To determine
Introduction: Consolidation is the merger or acquisition of small companies into a single large one. In financial accounting, consolidation means an aggregation of financial statements of a group company/different entities and reported at the group level.
To prepare: Journal Entries using cost method.
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Dain's Diamond Bit Drilling purchased the following assets this year.
Original
Basis
$ 115,000
118,500
299,000
Purchase
Asset
Date
Drill bits (5-year)
Drill bits (5-year)
January 25
July 25
April 22
Commercial building
Assume its taxable income for the year was $76,500 for purposes of computing the §179 expense (assume no bonus
depreciation). (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Leave no answer blank. Enter zero if
applicable.)
b. What is Dain's maximum depreciation deduction for the year (including §179 expense)? (Round your intermediate calculations and
final answer to the nearest whole dollar amount.)
Depreciation Deduction (including §179 expense)
On 1 January 20X8 Hendrix Co revalued its property to $200,000. Up to the date of the
revaluation, the asset had been accounted for at a cost of $160,000, and had accumulated
depreciation $40,000. The property had an expected useful life of fifty years from the date
of purchase and nil residual value.
State the accounting entries required to account for the revaluation in the financial
statements of Hendrix Co.
Debit or Credit
Account title
$
The net book value of Falcon Inc.'s property, plant, and equipment (PP&E) was $734,550 on January
1, 20Y4, and $658,000 on December 31, 20Y4. During 20Y4, Falcon recognized $50,400 of
depreciation expense on the PP&E, acquired $215,800 of new PP&E, and recognized a $5,600 loss
on the sale of old PP&E. How much cash did Falcon receive from the sale of PP&E during 20Y4?
O $236.350
O $241,950
O $247.550
O $286.750
O None of the above
Chapter 4 Solutions
Advanced Financial Accounting
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- Dain's Diamond Bit Drilling purchased the following assets this year. Purchase Original Asset Date Drill bits (5-year) January 25 $ Drill bits (5-year) July 25 Commercial building April 22 Basis 102,500 113,250 266,000 Assume its taxable income for the year was $55,250 for purposes of computing the §179 expense (assume no bonus depreciation). (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Leave no answer blank. Enter zero if applicable.) c. If the January drill bits' original basis was $2,491,500, what is the maximum amount of $179 expense Dain's may deduct for the year?arrow_forwardTopic: Intangible Assets (Goodwill) Guinevere Company is planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. The normal rate of return is 20%. The fair value of net assets of entity at current year end was P10,000,000. Excess earnings are purchased for 5 years P8,000,000 Excess earnings are capitalized at 25% P6,400,000 Annual average earnings are purchased for 3 years P10,800,000 What is the amount of goodwill if: 1. Annual average earnings are capitalized at 25%? A. 1,600,000 B. 3,600,000 C. 4,400,000 D. 2,000,000 2. Excess earnings are discounted at 12% for 5 years? (the PV of an ordinary annuity of 1 for 5 years at 12% is 3.60) A. 12,960,000 B. 10,800,000 C. 5,760,000 D. 7,200,000arrow_forwardAN entity acquired plant and equipment for $1 million on 1st January 20X9. The asset is depreciated at 25% a year on straight-line method and tax legislation permits to depreciate the assets at 30% a year for tax purpose. Tax rate is 30%. Calculate any DTL that might arise on the plant and equipment at 31/12/X9. a. $90 000 b. $15 000 c. $75 000 d. $300 000arrow_forward
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