A+ Answers

Brief Exercise 9-11

Suppose Nike, Inc. reported the following plant assets and intangible assets for the year ended May 31, 2014 (in millions): other plant assets $909.1; land $219.7; patents and trademarks (at cost) $525.2; machinery and equipment $2,115.0; buildings $955; goodwill (at cost) $199.2; accumulated amortization $49.3; and accumulated depreciation $2,228.

Prepare a partial balance sheet for Nike for these items. (List Property, Plant and Equipment in order of Land, Buildings and Equipment.)

Do It! Review 9-5

Match the statement with the term most directly associated with it.

Exercise 9-7

Wang Co. has delivery equipment that cost $53,220 and has been depreciated $24,560.

Record entries for the disposal under the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(a)  It was scrapped as having no value.

(b)  It was sold for $37,390.

(c)  It was sold for $19,530.

Exercise 9-8

Here are selected 2014 transactions of Cleland Corporation.

Jan. 1  Retired a piece of machinery that was purchased on January 1, 2004. The machine cost $61,860 and had a useful life of 10 years with no salvage value.

June 30  Sold a computer that was purchased on January 1, 2012. The computer cost $35,600 and had a useful life of 4 years with no salvage value. The computer was sold for $4,080 cash.

Dec. 31  Sold a delivery truck for $9,010 cash. The truck cost $24,280 when it was purchased on January 1, 2011, and was depreciated based on a 5-year useful life with a $3,370 salvage value.

Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Cleland Corporation uses straight-line depreciation. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Broadening Your Perspective 9-1

The financial statements of Tootsie Roll are presented below.

What were the total cost and bo  value of property, plant, and equipment at December 31, 2011? (Enter the amounts in thousands.)

Total cost  $

Bo  value  $

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  What was the amount of depreciation expense for each of the 3 years 2009–2011? (Hint: Use the statement of cash flows.) (Enter the amounts in thousands.)

  Depreciation

2009  $

2010  $

2011  $

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  Using the statement of cash flows, what are the amounts of property, plant, and equipment purchased (capital expenditures) in 2011 and 2010? (Enter the amounts in thousands.)

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Broadening Your Perspective 9-2

The financial statements of The Hershey Company and Tootsie Roll are presented below.

Based on the information in these financial statements and the accompanying notes and schedules, compute the following values for each company in 2011. (Round all percentages to 1 decimal places, e.g. 15.1% and asset turnover ratio to 2 decimal places, e.g. 15.21.)

(1) Return on assets.

(2) Profit margin (use “Total Revenue”).

(3) Asset turnover.

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Pblem 9-2A

At December 31, 2014, Navaro Corporation reported the following plant assets.

Land    $ 4,473,000

Buildings  $30,940,000 

Less: Accumulated depreciation—buildings  17,780,175  13,159,825

Equipment  59,640,000 

Less: Accumulated depreciation—equipment  7,455,000  52,185,000

Total plant assets    $69,817,825

During 2015, the following selected cash transactions occurred.

Apr.   1  Purchased land for $3,280,200.

May   1  Sold equipment that cost $894,600 when purchased on January 1, 2008. The equipment was sold for $253,470.

June   1  Sold land for $2,385,600. The land cost $1,491,000.

July   1  Purchased equipment for $1,640,100.

Dec.   31  Retired equipment that cost $1,043,700 when purchased on December 31, 2005. No salvage value was received.

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Journalize the transactions. Navaro uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.)