ACC220 CH 9 homework solutions.doc

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Department
Business Administration - Accounting & Financial Planning
Course
Business Administration - Accounting & Financial Planning ACC220
Professor
Ramonagirdauskas
Semester
Winter

Description
Weygandt, Kieso, Kimmel, Trenholm, Kinnear, BaAccounting Principles, Sixth Canadian Edition CHAPTER 9 ANSWERS TO QUESTIONS 3. The invoice cost, the cost of the safety inspection, and the cost for the required logo painted on the vehicle are capitalized, as they are required costs to put the vehicle into use. The insurance costs benefit the business for the term of the policy and so the costs should be allocated to the period of benefit from the policy, typically by initially recording the payment as prepaid insurance and then reducing the prepayment, charging insurance expense as the policy expires. 4. Land improvements are structural additions made to the land such as parking lots and fences. Clearing and grading the land are not land improvements but are part of the land cost as they are required to get the land ready for its intended use. 5. The purchase cost must be split between the land and building because the building is depreciated and the land is not. In addition, the cost of each item will be needed to determine any gain or loss on disposal if either one is later sold. 6. Justine’s arguments are somewhat valid, with respect to more useful information being provided when using the revaluation model. Where I do not agree with Justine is about the possibility that the revaluation model would only be applied to undervalued assets. For reasons of consistency, the method cannot be applied only to a select group of assets. 10. A company should choose the depreciation method it believes will best reflect the pattern over which the asset’s future economic benefits are expected to be consumed. The depreciation method must be revised if the expected pattern of consumption of the future economic benefits has changed. 12. Operating expenditures are ordinary repairs made to maintain the operating efficiency and expected productive life of the asset. Because they are recurring expenditures and normally benefit only the current accounting period, they are expensed when incurred. Capital expenditures are additions and improvements made to increase efficiency, productivity, or expected useful life of the asset. Because they benefit future periods, capital expenditures are debited to the asset account affected. Once capitalized, these expenditures are depreciated over their benefiting period. © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear, BarlAccounting Principles, Sixth Canadian Edition QUESTIONS (Continued) 13. Revision of the depreciation generally occurs when there is a change to any of the three factors that affect the calculation of depreciation: the asset’s cost, useful life, or residual value. Depreciation needs to be revised if there are capital expenditures, impairments in the asset’s recoverable amount, changes in the depreciation method, or changes in the estimated remaining useful life or residual value. The revisions are not correction of errors and so there is no revision of depreciation previously recorded in past accounting periods. 14. Factors that may contribute to an impairment loss include: obsolescence of a piece of equipment, loss of a market for a product manufactured, bankruptcy of the supplier of replacement parts for equipment, environmental concerns causing extra costs of disposal at the end of the useful life. Under International Financial Reporting Standards (IFRS) a company may write up the carrying amount of the asset if there is a reversal in a previously recorded impairment. The write up is limited to the amount required to increase the asset’s carrying amount to what it would have been if the impairment loss had not been recorded. Also under IFRS, a company will write up its property, plant, and equipment if it is using the revaluation model and the fair value increases. Adoption of the revaluation model is optional, and very rare. 16. Depreciation must be updated from the last time depreciation entries were recorded to the date of the sale because the depreciation expense must properly reflect the total period over which the asset’s economic benefits are used. Updating depreciation also aids in determining the correct amount of the gain or loss on disposition. 17. The asset and related accumulated depreciation should continue to be reported on the balance sheet, without further depreciation or adjustment, until the asset is retired. Reporting the asset and related accumulated depreciation on the balance sheet informs the reader of the financial statements that the asset is still being used by the company. However, once an asset is fully depreciated, no additional depreciation should be taken on this asset, even if it is still being used. In no situation can the accumulated depreciation exceed the cost of the asset. © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear, BarlAccounting Principles, Sixth Canadian Edition QUESTIONS (Continued) 19. Carrying amount of an item of property, plant, or equipment is a sub-total amount representing the net amount of the cost less the accumulated depreciation. The amount is not a general ledger account and so is not used in journal entries used to record dispositions. Instead, the asset and accumulated depreciation accounts are used in the journal entry. 21. The units-of-production method for depreciation is a common and ideal method of depreciating natural resources. There is a finite quantity of units of natural resource to be extracted. As extraction occurs, the conversion from one asset (natural resource) to another (inventory) can be measured in units and cost of the units can be fairly applied. Consequently, a more precise charge for depreciation can be arrived at that corresponds to the asset created (inventory) when the natural resource is reduced. The process of reducing the natural resource is called depletion which corresponds more directly to the meaning of the reduction of the asset through conversion to another asset (inventory). This term is in contrast to the term depreciation which is more closely associated with consumption or loss of use of depreciable assets. 22. The accounting for tangible and intangible assets is much the same. Tangible and intangible assets are reported at cost, which includes all expenditures necessary to prepare the asset for its intended use. Both tangible and intangible assets with finite lives are amortized over their useful life. In the case of long-lived tangible assets, the useful life or the physical life of the asset will be used as a limit of the length of time the assets will be depreciated. In the case of intangible life, there is no physical limitation in the usefulness of asset and the length of time the asset will be amortized is the shorter of its useful life or its legal life, usually on a straight-line basis. Due to their lack of substance, intangible assets are more likely to have indefinite useful lives and not need to be amortized, but only tested for impairment. This characteristic is the main difference between the accounting of tangible and intangible assets. 23. Impairment losses are treated as follows: (a) For finite life intangible assets, an impairment loss often brings about a change in the estimated remaining useful life for amortization recorded following the impairment. This is not the case with indefinite life intangibles since there is no amortization recorded for these types of intangible assets. (b) Under IFRS, indefinite life intangible asset must be tested for impairment at least one a year and reversals of impairment losses can be recorded. Under ASPE, the impairment test need not be performed annually, but must be performed if indicators of impairment are present. Reversals of impairment losses are not recorded under ASPE. © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear, BarloAccounting Principles, Sixth Canadian Edition (c) For goodwill, reversals for impairment are not recorded under either IFRS or ASPE. 25. Property, plant, and equipment and natural resources are often combined and reported in the balance sheet as “property, plant, and equipment” or “capital assets”. Intangible assets are listed separately after property, plant, and equipment. Goodwill must be disclosed separately. For assets that are depreciated or amortized, the balances of the accumulated depreciation and/or amortization must be disclosed in the balance sheet or in the notes to the financial statements. Depreciation and amortization expense for the period must also be disclosed either on the income statement or in the notes to the financial statements. When impairment losses have occurred they should be shown on a separate line on the income statement, with the details disclosed in a note. The notes to financial statements should disclose the depreciation or amortization methods and rates that are used. The carrying amount of each major class of long-lived assets should also be disclosed. Companies should also disclose their impairment policy in the notes to the financial statements. Under IFRS, companies must disclose in the notes to the financial statements if they are using the cost or the revaluation model for each class of assets, and include a reconciliation of the carrying amount at the beginning and end of the period for each class of long-lived assets. If a company uses the revaluation model, it must also disclose any increases or decreases from revaluation. Solutions Manu9-4 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KinnAccounting Principles, Sixth Canadian Edition SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 9-3 (a) O (b) C (c) C (d) C (e) O (f) C (g) O (h) C (i) O (j) C (k) C (l) O (m) C Solutions Ma9-5l Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KAccounting Principles, Sixth Canadian Edition BRIEF EXERCISE 9-4 Jan. 2 Land [$850,000 × ($352,000 ÷ $880,000)]......... 340,000 Building [$850,000 × ($396,000 ÷ $880,000)].... 382,500 Equipment [$850,000 × ($132,000 ÷ $880,000)]......... 127,500 Cash..........................................170,000.... Mortgage Notes Payable ($850,000 − $170,000)................. 680,000 BRIEF EXERCISE 9-8 (a) Depreciation expense for each year: End of Year Depreciable Depr. Depr. Accum. Carrying Year Amount* × Rate = Expense Depr. Amount $42,000 2014 $36,000 25% × 9/12 $ 6,750 $ 6,750 35,250 2015 36,000 25% 9,000 15,750 26,250 2016 36,000 25% 9,000 24,750 17,250 2017 36,000 25% 9,000 33,750 8,250 2018 36,000 25% × 3/12 2,250 36,000 6,000 *Depreciable amount = $42,000 − $6,000 = $36,000 (b) Total depreciation expense over the equipment’s useful life is $36,000. (See accumulated depreciation at end of 2018 above.) Solutions M9-6alChapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KiAccounting Principles, Sixth Canadian Edition BRIEF EXERCISE 9-9 The double diminishing-balance rate is 50% (25% × 2) and this rate is applied to carrying amount at the beginning of the year. Depreciation expense for each year is as follows: (a) Double Diminishing-balance Carrying Amount End of Year Beginning Depr. Depr. Accum. Carrying Year Of Year × Rate = Expense Depr. Amount $ 42,000 2014 $42,000 50% × 1/2 $ 10,500 $ 10,500 31,500 2015 31,500 50% 15,750 26,250 15,750 2016 15,750 50% 7,875 34,125 7,875 2017 7,875 50% 1,875¹ 36,000 6,000 ¹ Limited to the amount that brings the carrying amount to the residual value of $6,000 (b) Total depreciation expense over the equipment’s useful life is $36,000. (See accumulated depreciation at end of 2017 above.) BRIEF EXERCISE 9-10 (a) Annual depreciation: ($250,000 − $10,000) ÷ 6 = $40,000 Equipment cost.....................................$250,000.... Less accumulated depreciation ($40,000 × 3) for 2012 to 2014.................120,000 Carrying amount Dec. 31, 2014......................$130,000 (b) Impairment Loss.................................30,000.. Accumulated Depreciation—Equipment 30,000 Carrying amount (a)................................$130,000.. Less: Recoverable amount............................100,000 Impairment loss....................................$ 30,000.... Solutions M9-7al Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear, Accounting Principles, Sixth Canadian Edition BRIEF EXERCISE 9-12 (a) Accumulated Depreciation— Equipment..............................................25,700 Equipment............................................... 25,700 (b) Accumulated Depreciation— Equipment..............................................22,500 Loss on Disposal........................................3,200 Equipment............................................... 25,700 Cost of equipment.............................................$25,700 Less: Accumulated depreciation........................... 22,500 Carrying amount at date of disposal...................... 3,200 Proceeds from retirement....................................... 0 Loss on disposal..............................................$ 3,200 Solutions Man9-8 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear,Accounting Principles, Sixth Canadian Edition BRIEF EXERCISE 9-13 (a) Mar. 31 Depreciation Expense [($86,400 − $2,200) ÷ 6 × 3/12]........ 3,508 Accumulated Depreciation —Equipment.............................. 3,508 (b) Mar. 31 Cash.................................................. 15,000 Accumulated Depreciation— Equipment ¹...................................... 73,675 Gain on Disposal....................... 2,275 Equipment.................................. 86,400 ¹ [($86,400 − $2,200) ÷ 72 months × 63 months] = $73,675 Cost of equipment..................................$86,400 Less: accumulated depreciation.............. 73,675 Carrying amount at date of disposal....... 12,725 Proceeds from sale................................... 08 15,000 Gain on disposal...................................$ 2,275 (c) Mar. 31 Cash.......................................9,000...... Accumulated Depreciation— Equipment........................................ 73,675 Loss on Disposal...........................3,725 Equipment.................................. 86,400 Cost of equipment..................................$86,400 Less: accumulated depreciation.............. 52,500 Carrying amount at date of disposal....... 12,725 Proceeds from sale...................................9,000 Loss on disposal...................................$ 3,725 Solutions Ma9-9l Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KinneaAccounting Principles, Sixth Canadian Edition BRIEF EXERCISE 9-14 Jan. 7 Equipment (new)............................105,000** Accumulated Depreciation —Equipment................................78,000 Loss on Disposal...........................2,000*** Equipment (old).............................. 95,000 Cash................................................90,000* *Cash paid on exchange = list price of new less trade-in allowance: ($110,000 − $20,000 = $90,000) **Cost of new = consideration paid in cash plus fair value of old asset: ($90,000 + $15,000 = $105,000) ***Loss on disposal = Carrying amount − fair value: [($95,000 − $78,000) − $15,000 = $2,000] BRIEF EXERCISE 9-15 (a) Depreciable amount = $6,500,000 − $500,000 = $6,000,000 Depreciable amount per unit = $6,000,000 ÷ 25,000,000 tonnes = $0.24 per tonne Depreciation cost for ore extracted in Year 1: $0.24 per tonne × 5,000,000 tonnes = $1,200,000 Aug. 31Inventory ..................................... 1,200,000 Accumulated Depreciation—Mine 1,200,000 Depreciation to be included in cost of goods sold: $0.24 per tonne × 3,000,000 tonnes = $720,000 Depreciation to be included in inventory: $0.24 per tonne × 2,000,000 tonnes = $480,000 Solutions Ma9-10 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear,Accounting Principles, Sixth Canadian Edition BRIEF EXERCISE 9-15 (Continued) (b) CUONO MINING CO. Balance Sheet (Partial) August 31, 2014 _______________________________________________________ Assets Current assets Inventory................................................... $480,000* Property, plant, and equipment Ore mine....................................................$6,500,000 Less: Accumulated depreciation............ 1,200,000 5,300,000 * Check ($1,200,000 − $720,000 = $480,000) Solutions Man9-11 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KinnearAccounting Principles, Sixth Canadian Edition BRIEF EXERCISE 9-18 CANADIAN TIRE CORPORATION, LIMITED Balance Sheet (Partial) December 31, 2011 (in millions) Property, plant, and equipment Land (net of $1.4 of impairments).................. $ 748.8 Buildings.......................................................... $2,589.6 Less: Accumulated depreciation................... 1,014.8 1,574.8 Fixtures and equipment................................826.0 Less: Accumulated depreciation................... 545.6 280.4 Leasehold improvements............................... 712.5 Less: Accumulated depreciation................... 216.5 496.0 Assets under finance lease............................267.4 Less: Accumulated depreciation................... 138.5 128.9 Construction in progress........................................137.0.. Total property, plant, and equipment 3,365.9 Intangible assets FGL Sports indefinite-life intangibles........................ 316.8 Mark’s Work Wearhouse indefinite-life intangibles... 64.1 FGL Sports finite-life intangible assets...................... 22.4 403.3 Less: Accumulated amortization................................ 1.5 Total intangible assets 401.8 Goodwill ..........................................................377.6.............. Solutions Ma9-12 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KinneAccounting Principles, Sixth Canadian Edition SOLUTIONS TO EXERCISES EXERCISE 9-3 (a) Cost of equipment $75,000 Delivery 1,000 Insurance in transit 200 Testing and installation 2,800 Total cost $79,000 (b) April 1, 2014 because that is the date the equipment was available for use to the company. (c) The company should use the straight-line method since the economic benefits are expected to be consumed evenly over the equipment’s useful life. (d) Depreciation expense, 2014 = $79,000 ÷ 10 × 9/12 = $5,925 Depreciation expense, 2015 = $79,000 ÷ 10 = $7,900 Solutions Ma9-13 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KAccounting Principles, Sixth Canadian Edition EXERCISE 9-4 (a) Straight-line End of Year Depreciable Depr. Depr. Accum. Carrying Year Cost* × Rate = Expense Depr. Amount $345,000 2013 $330,000 20% × 1/2 $33,000 $33,000 312,000 2014 330,000 20% 66,000 99,000 246,000 * $345,000 − $15,000 = $330,000 (b) Diminishing-balance using double the straight-line rate Carrying Amount End of Year Beginning Depr. Depr. Accum. Carrying Year of Year × Rate = Expense Depr. Amount $345,000 2013 $345,000 40% × 1/2 $69,000 $69,000 276,000 2014 276,000 40% 110,400 179,400 165,600 (c) Units-of-Production End of Year Units-of- Depr. Depr. Accum. Carrying Year Production × Cost/Unit* = Expense Depr. Amount $345,000 2013 71,000 $0.55 $39,050 $39,050 305,950 2014 118,600 0.55 65,230 104,280 240,720 *Depreciable amount per unit is $0.55 per unit: [($345,000 − $15,000) ÷ 600,000 units = $0.55] Solutions 9-14alChapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KinneAccounting Principles, Sixth Canadian Edition EXERCISE 9-4 (Continued) (d) In this particular case, the unit-of-production can be used as management is able to reliably estimate the amount of total production that will be obtained by using the equipment. This method allows for the best matching of depreciation costs with the related benefits obtained from the asset’s use. Another factor affecting the choice of depreciation methods is consistency with methods used in the past for similar type assets. Since this is a rather expensive piece of equipment, Blue Ribbon’s policy of recording a half year’s depreciation in the year of acquisition could conceivably bias the amount charged for depreciation in 2013. Coincidentally, the date of purchase happens to be within one month of the mid-point of the fiscal year. The choice of methods would consequently not differ tremendously between the unit-of-production and the straight-line methods. Future purchases of depreciable assets could nonetheless unfairly charge depreciation in the year of purchase. By choosing the unit- of-production, the bias is removed. Solutions Ma9-15 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KinneAccounting Principles, Sixth Canadian Edition EXERCISE 9-6 (a) July 1 Equipment.................................. 500,000 2010 Cash......................................500,000 Dec. 31 Depreciation Expense............... 25,000 2010 Accumulated Depreciation— Equipment ($500,000 ÷ 10 × 6/12) 25,000 Dec. 31 Depreciation Expense............... 50,000 2013 Accumulated Depreciation— Equipment ($500,000 ÷ 10)... 50,000 (b) Carrying amount of the equipment—Dec. 31, 2013 [$500,000 – ($50,000 × 3.5 years)].............$325,000 Recoverable amount...............................225,000 Impairment loss................................$100,000.. Dec. 31 Impairment Loss........................ 100,000 2013 Accumulated Depreciation— Equipment............................. 100,000 (c) January 1, 2014 Carrying amount is $225,000 Depreciation expense for 2014: $225,000 ÷ 6.5 years = $34,615. December 31, 2014 Carrying amount is $190,385 ($225,000 − $34,615). (d) Carrying amount at Dec. 31, 2014............. $190,385 Carrying amount at Dec. 31, 2014 if no impairment recorded ($325,000 − $50,000) 275,000 Recoverable amount................................... 240,000 The reversal of impairment loss can be recognized to increase the carrying amount up to $275,000. Therefore a reversal of impairment loss of $49,615 should be recorded. ($240,000 − $190,385) Solutions Ma9-16 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, KinnearAccounting Principles, Sixth Canadian Edition EXERCISE 9-8 (a) Annual depreciation — first two years of equipment’s life ($90,000 – $9,000) ÷ 6 yrs = $13,500 per year (b) Carrying amount Building Sept. 30, 2014: $63,000 [$90,000 – ($13,500 × 2)] (c) 2014 Oct. 1 Equipment.................................. 15,000 Cash............................................15,000 (d) 2015 Sept. 30 Depreciation Expense............... 36,500 Accumulated Depreciation —Equipment.......................... 36,500 Carrying amount Sept. 30, 2014 (b).........................$63,000 Add: Upgrade................................................15,000...... 78,000 Less: Revised residual value..................................5,000 Remaining depreciable amount.............................. $73,000 Remaining useful life (4 − 2).................................... ÷ 2 years Revised annual depreciation expense.................... $36,500 (e) Calculations: Cost ($90,000 + $15,000).......................................... $105,000 Depreciation year ended Sept. 30, 2013... $13,500 Depreciation year ended Sept. 30, 2014... $13,500 Depreciation year ended Sept. 30, 2015... $36,500 63,500 Carrying amount Sept. 30, 2015.............................$41,500 Property, plant, and equipment Equipment.............................................. $105,000 Less: Accumulated depreciation........ 63,500 $41,500 Solutions Ma9-17 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear,Accounting Principles, Sixth Canadian Edition EXERCISE 9-9 (a) Jan. 2 No depreciation entry Apr. 1 Depreciation Expense........................ 1,125 Accumulated Depreciation —Equipment................................... 1,125 ($45,000 ÷ 10 years × 3/12) July 30 Depreciation Expense........................ 2,450 Accumulated Depreciation —Equipment................................... 2,450 ($12,600 ÷ 3 years × 7/12) Nov. 1 Depreciation Expense........................ 3,125 Accumulated Depreciation—Vehicles 3,125 ($35,000 − $5,000) ÷ 8 years × 10/12) Solutions Ma9-18 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear, Barlow Accounting Principles, Sixth Canadian Edition EXERCISE 9-9 (Continued) (b) Trans- Equip- Accum. Total Total Owner's action Cash ment Depr. PP&E Assets Equity Profit NE Jan. 2 NE −$8,000 −$8,000 NE NE NE Apr. 1 NE −$45,000 −$41,625 1 −$3,375 2 −$3,375 −$3,375 −$3,375 July 30 +$1,100 −$12,600 −$10,850 3 −$1,750 4 −$650 5 −$650 −$650 Nov. 1 −$36,000 −$35,000 −$26,250 7 +$34,250 8 −$1,750 9 −$1,750 −$1,750 6 +$43,000 1$41,625 = ($45,000 ÷ 10 years) × (9 years + 3 months) 2 3$3,375 = $45,000 − $41,625 $10,850 = ($12,600 ÷ 3 years) × (2 years + 7 months) 4$1,750 = $12,600 − $10,850 5−$650 = $1,100 − $1,750 6 $43,000 = Fair value of old vehicle$7,000 + cash $36,000 7$26,250 = [($35,000 − $5,000) ÷ 8 years)] × 7 years 8$34,250 = $43,000 – ($35,000 − $26,250) 9 $1,750 = Fair value old vehicle $7,000 – Carrying amount $8,750 ($35,000 − $26,250) Solutions Manual 9-19 Chapter 9 © 2013 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited. Weygandt, Kieso, Kimmel, Trenholm, Kinnear, Accounting Principles,
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