Practice Problems (3 pages)

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Practice Problems



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Practice Problems

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Lecture number:
15
Pages:
3
Type:
Lecture Note
School:
University of Arizona
Course:
Acct 200 - Introduction to Financial Accounting
Edition:
1

Unformatted text preview:

ACCT 200 1st Edition Lecture 15 Outline of Last Lecture I Test Info II BE 7 1 III BE 7 2 IV Basket Purchase V Goodwill VI BE 7 3 VII E 7 7 VIII BE 7 5 IX E 7 5 X BE 7 7 Outline of Current Lecture I Costs of Tangible Intangible Assets II Slide 29 Key Terms Review III Similar Problem to Homework 2 IV E 7 16 V Gains Losses on Disposal VI BE 7 10 Current Lecture Cost of tangible asset all costs to get it ready for its intended use purchase price any one time costs sales tax customization testing and installation Does NOT include annual costs for annual license or annual insurance Cost of intangible asset initial costs to purchase it plus legal defense costs ongoing costs once it is viable such as legal costs to get a patent through government channels Slide 29 key terms review Accumulated depreciation contra asset found on balance sheet listed with tangible assets and subtracted to get net value Book value specific asset cost accumulated depreciation Useful life estimated life of the asset Salvage or residual value expected value at the end of the useful life Similar problem to homework Cost of equipment 200 000 Useful life 10 years Salvage value 10 000 Purchase it on 8 1 12 Calculate annual depreciation cost salvage life 200 000 10 000 10 19 000 per year Own it in 2012 from Aug Dec 5 months 19 000 5 12 7917 12 31 2008 Depreciation expense 7917 Acc Dep 7917 12 31 2009 Same debit and credit but amount is 19 000 Year Cost Annual Dep Accumulated Dep Book Value 2008 200 000 7917 7917 192 083 200 000 7917 2009 200 000 19 000 26 917 173 083 200 000 26 917 2010 200 000 19 000 45 917 154 083 2011 2017 cost and annual dep the same 10th year 2018 200 000 11 083 190 000 10 000 First year is a fraction of a year second year through ninth year are full years last year is remainder of first year not used Book value salvage value in the last year E 7 16 Purchase a patent for 240 000 in 2012 Legal life is 20 years but only expect 6 more years of usefulness Incur 60 000 in legal fees in



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