Beruflich Dokumente
Kultur Dokumente
EXERCISES
Exercise 10-1
Calculation of goodwill:
Consideration exchanged
$25,000,000
Less fair value of net assets:
Book value of net assets
$16,250,000
Plus: Fair value in excess of book value:
Property, plant, and equipment
1,000,000
Intangible assets
2,970,000
Less: Book value in excess of fair value:
Receivables
(150,000) 20,070,000
Goodwill
$ 4,930,000
Exercise 10-2Requirement 1
Machine ($25,000 cash + $43,661 present value of note)....
Discount on note payable (difference)...........................
............................................................................Cash
.........................................................................25,000
..............................................Note payable (face value)
.........................................................................55,000
68,661
11,339
Requirement 2
2011: $43,661 x 8% = $3,493
2012: ($43,661 + 3,493) x 8% = $3,772
Alternate Exercise and Problem Solutions
Exercise 10-3
14,800
12,000
200
Exercise 10-4
Exercise 10-6Requirement 1
The McGraw-Hill Companies, Inc., 2011
10-2
($ in millions)
6
4
Requirement 2
(1) Percentage-of-revenue method:
$5,000,000
= 25% x $4,000,000 = $1,000,000
$20,000,000
(2) Straight-line method:
1/3 or 33.33 % x $4,000,000 = $1,333,333
The straight-line method is used since it produces the greater amortization,
$1,333,333.
Requirement 3
$4,000,000
(1,333,333 )
$2,666,667
PROBLEMS
Problem 10-1
Brown:
Cash............................................................................ 15,000
New equipment ($125,000 - 15,000)............................... 110,000
Accumulated depreciation - old asset (balance)............ 200,000
...............................................Old equipment (balance)
.......................................................................300,000
Filzinger:
New equipment ($110,000 + 15,000)............................. 125,000
Accumulated depreciation - old asset (balance)............ 220,000
............................................................................Cash
.........................................................................15,000
...............................................Old equipment (balance)
.......................................................................278,000
..........................Gain on exchange of assets ($110,000 58,000)
.........................................................................52,000
Problem 10-2Requirement 1
Expenditures for 2011:
January 1, 2011
March 31, 2011
June 30, 2011
October31, 2011
2011:
$500,000
600,000
800,000
600,000
x 12/12 =
x 9/12 =
x 6/12 =
x 2/12 =
Accumulated expenditures
(before interest) $2,500,000
Average accumulated expenditures -
$500,000
450,000
400,000
100,000
$1,450,000
Interest capitalized:
$1,450,000 x 10% = $145,000 = Interest capitalized
The McGraw-Hill Companies, Inc., 2011
10-4
2012:
January 1, 2012
($2,500,000 + 145,000)
January 31, 2012
March 31, 2012
May 31, 2012
$2,645,000
300,000
500,000
600,000
x
x
x
x
Accumulated expenditures
(before interest) $4,045,000
Average accumulated expenditures -
6/6
5/6
3/6
1/6
=
=
=
=
$2,645,000
250,000
250,000
100,000
$3,245,000
Interest capitalized:
$2,000,000 x 10.0% x 6/12 =
1,245,000 x 7.25%* x 6/12 =
$3,245,000
$100,000
45,131
$145,131 = Interest capitalized
$400,000
180,000
$580,000
$580,000
= 7.25%
$8,000,000
$4,045,000
145,131
$4,190,131
Requirement 3
2011:
$2,000,000 x 10% =
5,000,000 x 8% =
3,000,000 x 6% =
Total interest incurred
Less: Interest capitalized
2011 interest expense
$ 200,000
400,000
180,000
780,000
(145,000)
$ 635,000
2012:
$ 780,000
(145,131)
$ 634,869