ACTG1054 Answers To Practice Exercises From Course Outline and Learning Activities On Moodle
ACTG1054 Answers To Practice Exercises From Course Outline and Learning Activities On Moodle
ACTG1054 Answers To Practice Exercises From Course Outline and Learning Activities On Moodle
Chp 10 Subtopics
Do your reading assignment, pgs 488 to 495 and/or review your Chp 10 ppt slides on the above
subtopics, and then answer the following questions in your notebooks.
1. What is the similarity and difference between a fixed asset and an investment?
2. Builder’s Hardware spent $15,000 to purchase land. The company plans to hold the land
to do an expansion of the current warehouse. Will the cost (land) be classified as a fixed
asset, investment, or expense? Give your reason.
3. Habet & Habet Co. Ltd hires employees and pays them on a monthly basis. Should the
cost of wages be classified as a fixed asset, investment, or expense? Why?
4. Social Security Board (SSB) purchased photocopying machines from the U.S. The
purchase price of the items was $12,000. In addition, the following costs were incurred:
freight, $3,000 – freight terms, FOB shipping point; installation and testing, $600 and
$500 due to a reprogramming error. At what cost should the machinery be recorded in the
SSB’s accounting records? Journalize the acquisition/purchase of the units.
PE 10-1A
10-1B.
10-2A
10- 2B
Pg 524 Ex 10-9
B) DDB Method
Year 1= $17,000
Year 2= $13,600
Ex 10-10
Year 1= $7,500
Year 2= $6,750
Ex 10-11
Partial year/ current year = $105,000 * 20% = $21,000 X 8/12 = $14, 000
Following year = $ 18,200 depreciate the asset for the full year since it was now used for the
full year.
Pg 521 PE 10-4A
A) $180,000-$14,400= $165,600
Pg 525 Ex 10-12
2. Replaced the transmission fluid on a truck that had been in service for the past four years.
(Revenue expenditure)
3. Overhauled the engine on one of the trucks purchased three years ago. (Capital expenditure-
extraordinary repair)
4. Performed annual service of installing new spark plugs, changing the oil, and greasing the
5. Rebuilt the engine on one of the vans that had been driven 80,000 miles. (Capital-
extraordinary repair)
8. Tinted the back and side windows of the vans and installed a security system to discourage
9. Replaced a truck’s suspension system with a new suspension system, allowing for heavier
10. Installed an optional third-row seat on one of the vans. (Capital- Asset improvement)
FACULTY OF MANAGEMENT AND SOCIAL SCIENCES
PRINCIPLES OF FINANCIAL ACCOUNTING II (ACTG1054)
CHP 10: ACCTG FOR FIXED AND INTANGIBLE ASSETS
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000 --------
Book value at end of a year = cost minus accumulated depreciation@ specific yr end OR book value at the
beginning of a year minus depreciation expense for such specific year
Accumulated depreciation is the sum of depreciation expense up to a certain time
Depreciation expense refers to depreciation for the specific period only