Ch10 Beechy3e case 3 solution Essay
Chapter 10 Suggested Time
Case 10-1 Good Quality Auto Parts 10-2 Canadian Wilderness Wonders Inc 10-3 Provincial Hydro
10-4 May Company
10-5 Canadian Energy Corporation
Assignment 10-1 Amortization policy 10 10-2 Amortization policy 15 10-3 Amortization computation 15 10-4 Amortization computation (*W) 25 10-5 Amortization schedule 30 10-6 Analysis of four amortization methods—maximize income (*W) 20 10-7 Interpreting amortization disclosures 20 10-8 Identify amortization methods—amortization schedules 15 10-9 Identify, recalculate amortization 20 10-10 …show more content…
12. Minimum amortization tests require that a company calculate two amortization amounts, and record the higher value as amortization expense:
a. (cost - salvage (fair value at the end of the asset’s total life))/total life
b. (cost - residual (fair value at the end of the asset’s useful life for this company))/useful life to this company.
Residual and salvage values are both fair values; they’re at different points in time.
The test is meant to provide a minimum amount of amortization in the circumstance where the company is not keeping the asset for its entire life, and residual values are high.
13. A company may choose one of the following policies to deal with depreciation of assets acquired part-way through a year:
a. Exact calculation of fractional-year depreciation.
b. Accounting policy convention (All, none or some of the depreciation charged in the first/last year of ownership.)
14. The inventory appraisal system of depreciation requires that the assets debited to the asset account be inventoried at the end of the period and then costed based on their present condition (i.e., current replacement cost). The difference between the balance in the asset account and the inventory valuation determined in this manner is depreciation expense for the period. Cash on sale of