Challenging Issues Under Accrual Accounting: Long-Lived Depreciable Assets – A Closer Look Discussion Questions 8-1. Some factors determining the estimated useful life of assets might include: a. prior experience the company b. industry norms c. anticipated technological advancements d. the way the asset will be used e. anticipated company growth An important point that needs to be made during the discussion of this question
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| Offer training to the employees in service‚ sanitation‚ and safety procedures. Allocate duties and responsibility to the staff in according to the work requirements. Solve customer complaints regarding food service. Organize work rosters‚ splitting sales and expense by type of restaurant or activity. What are the job’s key responsibilities? | Make sure efficient operation of the restaurant by organizing‚ directing and coordinating all the activities. | What are the performance standards expected
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1. Calculate the annual depreciation expense that Delta and Singapore would record for each $100 gross value of aircraft. Depreciation=(original value-residue value)/estimated used year a) For Delta‚ what was its annual depreciation expense (per $100 of gross aircraft value) prior to July 1‚ 1986; from July 1‚ 1986 through March 31‚ 1993; and from April 1‚ 1993 on? Annual depreciation expenses each $100 gross value of aircraft: Before July 1‚ 1986: (100-100x10%)÷10=9$
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| | | | | |2A | |Compute depreciation under different methods. | |Simple | |30–40 | | | | | | | | | |3A | |Compute depreciation under different methods. | |Moderate | |30–40
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income is substantially smaller than average total assets‚ the percentage decrease in the numerator would be greater‚ and ROA would be understated. However‚ in the next two years‚ net income would be overstated because it is not burdened by a depreciation charge‚ average total assets would remain understated‚ and ROA would be overstated. b. This error does not affect cash flows‚ but it does affect classification within the statement of cash flows. Expensing results in an operating cash ouflow
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computing the cost of plant assets. C2: Distinguish between revenue and capital expenditures‚ and account for them. C3: Explain depreciation for partial years and changes in estimates. 8-3 Analytical Learning Objectives A1: Compute total asset turnover and apply it to analyze a company’s use of assets. 8-4 Procedural Learning Objectives P1: Compute and record depreciation using the straight-line‚ units-of-production‚ and decliningbalance methods. P2: Account for asset disposal through discarding
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– Dec. | Bad Debts Expense Accounts receivable-Fell | 1‚400 | 1‚400 | | | | | 31 – Dec. | Bad Debts Expense (840‚000 – 30000)*1% Allowance for Doubtful accounts | 8‚100 | 8‚100 | | | | | 31 – Dec. | Bad Debts Expense Allowance for Doubtful Accounts (120‚000*10%)-2100 | 9‚900 | 9‚900 | | | | | 31 – Dec. | Bad Debts Expense (840‚000 – 30‚000*.75%) Allowance for Doubtful Accounts | 6‚075 | 6‚075 | | | | | 31 – Dec. | Bad Debts Expense Allowance for
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0 f) Recorded depreciation of building for period used‚ $600. 0 -600 a) Adjusting entries on June 30 Debit Credit Supplies Expense 1280 Supplies on hand 1280 Utilities Expense 180 Utilities payable 180 Insurance Expense 240 Prepaid Insurance 240 Unearned Service Revenue 4100 Service Revenue 4100 Salaries and Wages Expense 1250 Salaries and Wages payable 1250 Depreciation Expense 250 Accumulated Depreciation—Equipment 250
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for $100 in supplies what does not affect assets or net income | -$100 | $ 0 | (b) | Recorded an adjusting entry to record use of $30 of the above supplies.Supplies Supplies Expense $100 | $30 __ Adj. $30 |_______Bal. $70 | Bal. $30 | | (c) | Made sales of $1‚300‚ all on account.
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entries for the following transactions. Omit explanations. 1. Depreciation on equipment is $800 for the accounting period. 2. There was no beginning balance of supplies and purchased $500 of office supplies during the period. At the end of the period $80 of supplies were on hand. 3. Prepaid rent had a $1‚000 normal balance prior to adjustment. By year end $600 was unexpired. Solution 161 |1 |Depreciation Expense |800
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