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UGBA 102A Lecture Notes - Lecture 8: Balance Sheet, Income StatementExam


Department
Business Administration Undergraduate Program
Course Code
UGBA 102A
Professor
Briginshaw
Study Guide
Final

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Kousha Modanlou
UGBA 102A
October 19, 2018
Chapter 8 Homework: Page 427 Q 1,4; Page 427-428 MC 2,8; Page 434, 436, 438; E8-10; E8-
16; E8-21
Page 427
Q1: Long-lived assets are non-current assets that are not sold but rather retained by a business for
use in normal operations for over one year. Examples include land, plant and equipment, natural
resources, and intangibles like patents. Potential future usage incentivizes business to acquire
certain long-lived assets, essentially collections of future services that can generate revenue
when used over a time period. The cost of the asset is allocated as a periodic expense as those
services are employed.
Q4: After acquisition, the cost principle is used to record a long-lived asset into the account..
Using the cost measurement concept, the acquisition cost of a long-lived asset is the cash
equivalent price paid for it in addition to all of the incidental costs expended to attain it, deliver it
to the location it will be used, and ready it for use.
Page 427-428
MC2: A
MC8: D
Page 434, 436, 438
E8-10:
1. a. Method: Straight-line
Year
Computation
Depreciation
Accumulated
Depreciation
Net Book Value
At acquisition
$950,000
1
($950,000 - $50,000) x
$180,000
$180,000
770,000
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2
($950,000 - $50,000) x
180,000
360,000
590,000
3
($950,000 - $50,000) x
180,000
540,000
410,000
4
($950,000 - $50,000) x
180,000
720,000
230,000
5
($950,000 - $50,000) x
180,000
900,000
50,000
b. Method: Units-of-production: ($950,000 $50,000) ÷ 300,000 = $3.00 per unit of
output
Year
Computation
Depreciation
Accumulated
Depreciation
Net Book Value
At
acquisition
$950,000
1
$3.00 x 70,000 units
$210,000
$210,000
740,000
2
$3.00 x 67,000 units
201,000
411,000
539,000
3
$3.00 x 50,000 units
150,000
561,000
389,000
4
$3.00 x 73,000 units
219,000
780,000
170,000
5
$3.00 x 40,000 units
120,000
900,000
50,000
c. Method: Double-declining balance
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