Scribd
Upload
89 views

Assignment_Ch 10

Uploaded by

mohad8982
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
89 views

Assignment_Ch 10

Uploaded by

mohad8982
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Assignment_2_Ch 10

Questions and solution


BE10-1 Previn Brothers Inc. purchased land at a price of $27,000. Closing costs
were $1,400. An old building was removed at a cost of $10,200. What amount
should be recorded as the cost of the land?
BE10-2 Zhang Company is constructing a building. Construction began on February
1 and was completed on December 31. Expenditures were HK$1,800,000 on March
1, HK$1,200,000 on June 1, and HK$3,000,000 on December 31. Compute Zhang’s
weighted-average accumulated expenditures for interest capitalization purposes.
BE10-3 Zhang Company (see BE10-2) borrowed HK$1,000,000 on March 1 on a 5-
year, 12% note to help finance construction of the building. In addition, the company
had outstanding all year a 10%, 5-year, HK$2,000,000 note payable and an 11%, 4-
year, HK$3,500,000 note payable. Compute the capitalization rate used for interest
capitalization purposes.
BE10-4 Use the information for Zhang Company from BE10-2 and BE10-3. Compute
avoidable interest for Zhang Company
E10-26 (Entries for Disposition of Assets) On December 31, 2015, Mitsui Inc. has a machine
with a book value of ¥940,000. The original cost and related accumulated depreciation at
this date are as follows (all amounts in thousands).
Machine ¥1,300,000
Less: Accumulated depreciation 360,000
Book value ¥ 940,000
Depreciation is computed at ¥72,000 per year on a straight-line basis.
Instructions
Presented below is a set of independent situations. For each independent situation, indicate
the journal entry to be made to record the transaction. Make sure that depreciation entries
are made to update the book value of the machine prior to its disposal.

(a) A fire completely destroys the machine on August 31, 2016. An insurance settlement of
¥630,000 was received for this casualty. Assume the settlement was received immediately.
(b) On April 1, 2016, Mitsui sold the machine for ¥1,040,000 to Avanti Company.
(c) On July 31, 2016, the company donated this machine to the Mountain King City Council.
The fair value of the machine at the time of the donation was estimated to be ¥1,100,000.
E10-27 (Disposition of Assets) On April 1, 2015, Pavlova Company received a
condemnation award of $410,000 cash as compensation for the forced sale of the
company’s land and building, which stood in the path of a new highway. The land
and building cost $60,000 and $280,000, respectively, when they were acquired. At
April 1, 2015, the accumulated depreciation relating to the building amounted to
$160,000. On August 1, 2015, Pavlova purchased a piece of replacement property
for cash. The new land cost $90,000, and the new building cost $380,000.
Instructions
Prepare the journal entries to record the transactions on April 1 and August 1, 2015

Answer:

You might also like