CHAPTER 10

Acquisition and Disposition

of Property, Plant, and Equipment

BRIEF EXERCISE 10-2

Expenditures

Date

Amount

Capitalization

Period

Weighted-Average

Accumulated Expenditures

3/1

$1,800,000

10/12

$1,500,000

6/1

1,200,000

7/12

700,000

12/31

3,000,000

0

0

$6,000,000

$2,200,000

LO: 3, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

BRIEF EXERCISE 10-3

Principal

Interest

10%, 5-year note

$2,000,000

$200,000

11%, 4-year note

3,500,000

385,000

$5,500,000

$585,000

Weighted-average interest rate =

$585,000

= 10.64%

$5,500,000

LO: 3, Bloom: AP, Difficulty: Simple, Time: 3-5, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

BRIEF EXERCISE 10-4

Weighted-Average

X

Interest

=

Avoidable

Accumulated Expenditures

Rate

Interest

$1,000,000

12%

$120,000

1,200,000

10.64%

127,680

$2,200,000

$247,680

LO: 3, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

Copyright © 2016 John Wiley & Sons, Inc.

Kieso,

Intermediate Accounting,

16/e, Solutions Manual

(For Instructor Use Only)

10-1

BRIEF EXERCISE 10-8

Equipment

3,300

Accumulated Depreciation—Trucks

18,000

Trucks

20,000

Cash

500

Gain on Disposal of Trucks

800

LO: 4, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

BRIEF EXERCISE 10-9

Equipment ($3,300 – $800)

2,500

Accumulated Depreciation—Trucks

18,000

Trucks

20,000

Cash

500

LO: 4, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

BRIEF EXERCISE 10-10

Equipment

5,000

Accumulated Depreciation—Machinery

3,000

Loss on Disposal of Machinery

4,000

Machinery

9,000

Cash

3,000

LO: 4, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

BRIEF EXERCISE 10-11

Trucks (new)

37,000

Accumulated Depreciation—Trucks

27,000

Loss on Disposal of Trucks

2,000

Trucks (used)

30,000

Cash

36,000

LO: 4, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

10-2

Copyright © 2016 John Wiley & Sons, Inc.

Kieso,

Intermediate Accounting,

16/e, Solutions Manual

(For Instructor Use Only)

BRIEF EXERCISE 10-12

Trucks (new)

......................................................................

35,000

Accumulated Depreciation—Trucks

...............................

17,000

Loss on Disposal of Trucks

.............................................

1,000

Trucks (used)

...........................................................

20,000

Cash

..........................................................................

33,000

LO: 4, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

BRIEF EXERCISE 10-14

(a)

Depreciation Expense ($2,400 X 8/12)

.............................

1,600

Accumulated Depreciation—Machinery

................

1,600

(b)

Cash

...................................................................................

10,500

Accumulated Depreciation—Machinery

($8,400 + $1,600)

..........................................................

10,000

Machinery

.................................................................

20,000

Gain on Disposal of Machinery

..............................

500

LO: 6, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

BRIEF EXERCISE 10-15

(a)

Depreciation Expense ($2,400 X 8/12)

.............................

1,600

Accumulated Depreciation—Machinery

................

1,600

(b)

Cash

...................................................................................

5,200

Loss on Disposal of Machinery

.......................................

4,800

Accumulated Depreciation—Machinery

($8,400 + $1,600)

..........................................................

10,000

Machinery

.................................................................

20,000

LO: 6, Bloom: AP, Difficulty: Simple, Time: 5-7, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None

Copyright © 2016 John Wiley & Sons, Inc.

Kieso,

Intermediate Accounting,

16/e, Solutions Manual

(For Instructor Use Only)

10-3