Accounting assignment

Q1)

A Book Value $4253

B Gain (loss) on sale $1517
C Net income would increase by $1517
D Total assets would increase by $1517
E Cash flows would increase by $5770
section Investing activities

Q2)

A)

Depletion charge per unit= (cost-salvage value)/ estimated number of units

= (588,000-0)/ 49,000

= 12

B1)

Depletion expense for year 1

= depletion charge per unit x units extracted

= 12 x 25,725 = $308,700

Depletion expense for year 2

= 12 x 22,050 = $264,600

B2)
Q3)

A1)

Company A

Depreciation expense= (60,000-5000) / 4 = $13,750

Revenue = $49,000

Net income = Revenue – depreciation expense = 49,000-13750 = $35,250

Company B

Depreciation expense

Y1 30,000

Y2 15,000

Y3 7500

Y4 2500*

Net income = 49,000-30,000 = $19,000

Company C

Per unit cost = (60,000-5000)/250,000 = $0.22 per mille

Depreciation expense = 79,000 x 0.22 = $17,380

Net income = 49,000-17380 = $31,620

A2) Company A

B1)

Company A

Depreciation expense= (60,000-5000) / 4 = $13,750

Revenue = $49,000

Net income = Revenue – depreciation expense = 49,000-13750 = $35,250

Company B

Depreciation expense

Y4 2500*

Net income = 49,000-2500 = $46,500

Company C

Per unit cost = (60,000-5000)/250,000 = $0.22 per mille

Depreciation expense = 74,000 x 0.22 = $16,280

Net income = 49,000-16280 = $32,720

B2) Company C

C1)

Company A

Accumulated depreciation= $41,250

Book value = 60,000-41,250 = $18,750

Company B

Accumulated depreciation = $52,500

Book value = 60,000-52,500 =$7500

Company C
Accumulated depreciation = $38,940

Book value = 60,000-38940 = $21,060

C2) Company C

D1)

Company A= $35,250

Company B= $ 46,500

Company C= $32,720

D2) Company B

E) The cash flow from operating activities will be the same for each company because income tax is not
considered. Depreciation expense is not a cash flow item.

Q4)

A)

Straight line depreciation= (32900-3700) / 5 = $5840

Y1 $5840

Y2 $5840

Y3 $5840

Y4 $5840

Y5 $5840

B)

Y1 $13,160

Y2 $7896

Y3 $4737.6

Y4 $2842.56

Y5 $1705.54

D)

Straight line
Book value = $9540

Sales price = $ 20,500

Gain of $10,960

Double declining balance

Book value = $4263.84

Sales price = $ 20,500

Gain of $ 16,236.16

Q5)

Annual depreciation = (114000-12000)/4= $25,500

Depreciation year 1 = $25,500

Cost of machine in year 2 is 114000-25500 = $88,500

Depreciation of year 2 is $25,500

Cost of machine in year 3 is 88,500-25,500 = $63,000

Annual depreciation = (63000-6000) / 2 = $28,500

The depreciation expense of year 3 is $28,500

Cost of machine in year 4 is 63000-28500= $34,500

The depreciation expense of year 4 is $28,500

Cost of machine at the end of year 4 is 34500-28500= $6000

Q6)