Jawaban Financial Accounting IFRS Edition (Weygandt, Kimmel, and Kieso) P9-3A

P9-3A

a.       (1)                    Factory Machinery

Cash Price                               R$ 38,000

Sales tax                                  R$ 1,700

Shipping Cost                         R$ 150

Insurance during shipping       R$ 80

Installation and testing           R$ 70

                                                R$ 40,000

Jan 1 Factory Machinery                                 40,000

         Oil and Lubricants                                   100

                        Cash                                                    40,100

(2)  Dec 31 Depreciation Expense                              7,000

                                    Accumulated Depreciation                 7,000

(40,000-5,000= 35,000 : 5 = 7,000 )

b.      (1) Straight-line

Cost – residual value = depreciation cost : useful life = annual depreciation expense

R$ 160,000 – R$ 10,000 = R$ 150,000 – 4 = R$ 37,500

Depreciation Rate = 100% : 4 = 25%

PELE COMPANY
Computation				=	Annual Depreciation Expense	End of Year
Year	Depreciable Cost	X	Depreciation Rate			Accumulated Depreciation	Book Value
2011	R$ 150,000		25%		R$ 37,500	R$ 37,500	R$ 122,500
2012	150,000		25%		37,500	75,000	85,000
2013	150,000		25%		37,500	112,500	47,500
2014	150,000		25%		37,500	150,000	10,000

                (2) Declining Balance

            Depreciation Rate =  100% : 4 = 25% X 2 = 50%

            Book value of beginning of year X Declining balance rate = Annual Depreciation Expense

            R$ 160,000 X 50% = R$ 80,000

PELE COMPANY
Computation				=	Annual Depreciation Expense	End of Year
Year	Depreciable Cost	X	Depreciation Rate			Accumulated Depreciation	Book Value
2011	R$ 160,000		50%		R$ 80,000	R$ 80,000	R$ 80,000
2012	80,000		50%		40,000	120,000	40,000
2013	40,000		50%		20,000	140,000	20,000
2014	20,000		50%		10,000	150,000	10,000

            (3) Units of Activity

Depreciable Cost – Total Units of Activity  = Depreciation cost per unit

R$ 150,000 – 125,000 = R$ 1,2

PELE COMPANY
Computation				=	Annual Depreciation Expense	End of Year
Year	Units of Activity	X	Depreciation Cost/Unit			Accumulated Depreciation	Book Value
2011	45,000		R$ 1,2		R$ 54,000	R$ 54,000	R$ 106,000
2012	35,000		1,2		42,000	96,000	64,000
2013	25,000		1,2		30,000	126,000	34,000
2014	20,000		1,2		24,000	150,000	10,000

c.       The highest amount of depreciation expense in year 1 (2011) = Declining-Balance Method

The highest amount of depreciation expense in year 4 (2014) = Straight-Line Method

The highest total amount over the 4 year period = Total amount depreciation to use all method is the same for the 4 year period