Accounting 5

Nov 13
The following changes have been made
Pb 11-5
		Cost	Normal repairs	Install charges	Appraised value	Residual
Land A					92,000
Building A					800,000
Land A & Building A	850,000
Land B
Building B
Donated equip - Fair value		17,000				2,000
Machine A		116,000	550	15,000		7000
Machine B
Pb 11-7
		Changed Numbers
	Cost of mine	1700000
	Development cost	700000
	Est total tons	450000
	Revised est tons	525000

Problem 11-5

(1)

Allocation in proportion to appraised values at date of exchange:

% of

Amount Total

Land $

Building

$ 100

This percentage is multiplied times the cost.

Land $

Building

$

(2) $

(3) annual depreciation

(4) $

(5) $ ? shares x $ per share =

Plus demolition of old building

(6)

(7) $ Fair value.

(8) $

(9) $

(10) $

(11) $

(12) $

(13) $ PVAD = $(7.71008 EQ \S(*) )

EQ \S(*) Present value of an annuity due of $1: n = 11, i = 8% (from Table 6)

(14) $ $

years

Problem 11-7

Requirement 1

Cost of mineral mine :

Purchase price $

Development costs

$

Depletion :

Depletion per ton = = $ per ton

tons

2011 depletion =

2012 depletion:

Revised depletion rate =

= $

tons

2012 depletion =

Depreciation:

Structures:

$

Depreciation per ton = = per ton

tons

2011 depreciation =

2012 depreciation:

Revised depreciation rate =

= $.

tons

2012 depreciation =

Problem 11-7 (continued)

Equipment:

$

Depreciation per ton = = $. per ton

tons

2011 depreciation =

2012 depreciation:

Revised depreciation rate =

= $.

tons

2012 depreciation =

Requirement 2

Mineral mine:

Cost $

Less accumulated depletion:

2011 depletion

2012 depletion

Book value, 12/31/12 $

Structures:

Cost $

Less accumulated depreciation:

2011 depreciation $

2012 depreciation

Book value, 12/31/12 $

Equipment:

Cost

Less accumulated depreciation:

2011 depreciation $

2012 depreciation

Book value, 12/31/12 $