Chapter 8: 12DQ (page 386)
Question: What are the characteristics of an intangible asset?
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Question: On January 4 of this year, Diaz Boutique incurs a $105,000 cost to modernize its store. Improvements include new floors, ceilings, wiring, and wall coverings. These improvements are estimated to yield benefits for 10 years. Diaz leases its store and has eight years remaining on the lease. Prepare the entry to record (1) the cost of modernization and (2) amortization at the end of this current year.
Refer to the statement of cash flows for Google in Appendix A for the fiscal year ended December 31, 2015, to answer the following.
On January 2, Manning Co. purchases and installs a new machine costing \(324,000 with a five-year life and an estimated \)30,000 salvage value. Management estimates the machine will produce 1,470,000 units of product during its life. Actua production of units is as follows: 355,600 in 1st year, 320,400 in 2nd year, 317,000 in 3rd year, 343,600 in 4th year, 138,500 in 5th year. The total number of units produced by the end of year 5 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.)
Required
Prepare a table with the following column headings and compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method
Year | Straight line | Units of production | Double declining balance |
Answer each of the following related to international accounting standards.
a. Accounting for plant assets involves cost determination, depreciation, additional expenditures, and disposals. Is plant asset accounting broadly similar or dissimilar between IFRS and U.S. GAAP? Identify one notable difference between IFRS and U.S. GAAP in accounting for plant assets.
b. Describe how IFRS and U.S. GAAP treat increases in the value of plant assets subsequent to their acquisition (but before their disposition).
Question: Refer to December 31, 2015, balance sheet of Samsung in Appendix A. What long-term assets discussed in this chapter are reported by the company?
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