Accounting 305
Week 5 Assignment
P 11-5
(1)
Amount % of Total
Land $72,000 8
Building 828,000 92
$900,000 100
Land $812,500 x 8% = $ 65,000
Building $812,500 x 92% = 747,500
$812,500
(2) 812,500 x 92% = 747,500
(3) $747,500 - 47,500/$14,000 annual depreciation = 50 years
(4) Since using straight line method it is the same as the last year 14,000
(5) 3,000 shares x $25 per share = $75,000 + 10,400 (for demolition of old building = $85,400
(6) No depreciation for use so there is N/A
(7) Fair value is $16,000
(8) $16,000 x 15% (1.5 x SL rate of 10%) = 2,400
(9) ($16,000 - 2,400) x 15% = 2,040
(10) Total cost of $110,000 - $11,000 = 99,000 in normal repairs
(11) ($99,000 - 5,500) x 10/55 = 17,000
(12) ($99,000 - 5,500) x 9/55 x 4/12 = 5,100
(13) PV= $4,000 (7.71008 *) 30,840
(14) 30,840/15(years) = $2,056
P 11-7
Marion Company
Land Purchase
$1,600,000
Additional developmental costs
$600,000
Estimated tons extracted
400,000
Land resale value
$100,000
Building costs
$150,000
Useful life of buildings
10 years
New equipment costs
80,000
Auction price of equipment
4,000
2011 ore extracted and sold
50,000 tons
Revised estimated extracted
487,500
2012 ore extracted and sold
80,000 tons
Requirement 1
Depletion and Depreciation
Cost of Mineral mine
Purchase price
$1,600,000
Development costs
600,000
$2,200,000
Depletion:
Land resale value
$100,000
Estimated ore extracted in tons
400,000
Depletion per ton
5.25
2011
ore extracted (tons)
50,000
Depletion
$262,000
2012
Ore extracted (tons)
80,000
Revised depletion rate
487,500
Depletion
$4.20
$336,000
Depreciation
Building costs
150,000
depletion per ton
0.375
2011 depreciation
$18,750
Revised depreciation rate
$0.30
2012 depreciation
$24,000
Equipment...