ACCT 200 Outline of Last Lecture I. Some DefinitionsII. Double Declining Balance Method ExampleIII. Disposal of Fixed AssetsOutline of Current Lecture I. Homework 7-2II. Homework 7-3III. Homework 7-4IV. Homework 7-6V. Homework 7-9VI. Homework 7-11VII. Homework 7-12VIII. Homework 7-14Current LectureI. Homework 7-2a. Yes—all expenditures should be recorded as an increase in the land accountb. No—land is never depreciated because it can’t be used upII. Homework 7-3Initial Cost = 700,000Legal fees = 1,900These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Delinquent fees = 9,000Demolition cost = 6,000Salvage = (1,175)III. Homework 7-4a. Revenueb. Revenuec. Capitald. Capitale. Capitalf. Capitalg. Capitalh. Revenuei. Capitalj. Capital**revenue expenditure—routine, expense**capital expenditure—adds new value to assetIV. Homework 7-6a. No—this is what we originally paid for the equipment (historical cost).b. No—the $750,000 is accumulation of past depreciation.V. Homework 7-9a. Year 1= (240000-0)/40 = 6,000Year 2= (240000-0)/40 = 6,000b. Year 1= (240000-0) x (2/40) = 12,000Year 2= (240000-12000) x (2/40) = 11,400VI. Homework 7-11a. 2012 (42000-6000) x (1/10) x (3/12) = 9002013 (42000-6000) x (1/10) x (12/12) = 3600b. 2012 (42000-0) x (2/10) x (3/12) = 21002013 (42000-2100) x (2/10) x (12/12) = 7980VII. Homework 7-12a. 2010 795 2009 4924934 423116147 138721154 828(9238) (8730)13792 10693In 2010, they bought more, spent more, and did more to make their assets better. This shows that Kraft must be expanding their operationsb. Normally you would expect book value to decrease, BUT since Kraft is growing, this is normal.VIII. Homework 7-14a. (37500 – 45000)/12=27,500 per yearb. book value = 37500 – (27500 x 3) = 292,500c. Loss 280000 – 292500 = 12,500Cash 280000Asset (375000)Loss (12500)Accumulated depreciation 82500d. Gain 300000 – 292500 = 7500Cash 300000Asset (375000)Gain 7500Accumulated Depreciation
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