Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
CHAPTER 9
Long-Lived Assets
ASSIGNMENT CLASSIFICATION TABLE
Study Objectives
Brief
Problems Problems
Questions Exercises Exercises
Set A
Set B
1. Apply the cost principle to
property, plant, and
equipment.
1, 2, 3, 4
1, 2, 3, 4
1, 2, 11
2. Explain and calculate
amortization.
5, 6, 7, 8
5, 6, 7, 8, 2, 3, 4, 11 2, 3, 7, 8, 2, 3, 7, 8,
9
9, 12
9, 12
5, 6, 7
1, 3, 4, 6 1, 3, 4, 6
3. Revise periodic amortization. 9, 10, 11
10, 11
4, 5, 6, 9 4, 5, 6, 9
4. Account for the disposal of
property, plant, and
equipment.
12, 13
12, 13, 14 8, 9
7, 8, 9
7, 8, 9
5. Calculate and record
amortization of natural
resources.
14, 15
15
10
12
12
6. Identify the basic accounting 16, 17,
issues for intangible assets. 18, 19
16
11, 12
10, 11
10, 11
7. Illustrate the reporting and
20, 21
analysis of long-lived assets.
17, 18, 19 13, 14
9, 11, 12, 9, 11, 12,
13
13
Solutions Manual
9-1
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
1A
Record property transactions.
2A
Difficulty
Time
Level Allotted (min.)
Simple
20-30
Calculate partial period amortization.
Moderate
20-30
3A
Determine cost; calculate and compare amortization under
different methods.
Moderate
30-40
4A
Account for operating and capital expenditures and asset
impairments.
Moderate
20-30
5A
Record impairment and calculate revised amortization.
Moderate
20-30
6A
Record operating and capital expenditures and calculate
revised amortization.
Moderate
25-35
7A
Calculate and compare amortization and gain or loss on
disposal under straight-line and units-of-activity methods.
Moderate
30-40
8A
Record acquisition, amortization, and disposal of equipment.
Moderate
30-40
9A
Record property, plant, and equipment transactions; prepare
partial financial statements.
Complex
40-50
10A
Correct errors in recording intangible asset transactions.
Complex
25-35
11A
Record intangible asset transactions; prepare partial balance
sheet.
Moderate
30-40
12A
Record equipment and natural resource transactions; prepare Moderate
partial financial statements.
30-40
13A
Calculate ratios and comment.
Moderate
15-25
1B
Record property transactions.
Simple
20-30
2B
Calculate partial period amortization.
Moderate
20-30
3B
Determine cost; calculate and compare amortization under
different methods.
Moderate
30-40
4B
Account for operating and capital expenditures and asset
impairments.
Moderate
20-30
5B
Record impairment and calculate revised amortization.
Moderate
20-30
6B
Record operating and capital expenditures and calculate
revised amortization.
Moderate
25-35
Solutions Manual
9-2
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
ASSIGNMENT CHARACTERISTICS TABLE (Continued)
Problem
Number
Description
Difficulty
Time
Level Allotted (min.)
7B
Calculate and compare amortization and gain or loss on
disposal under straight-line and double declining-balance
methods.
Moderate
30-40
8B
Record acquisition, amortization, and disposal of equipment.
Moderate
30-40
9B
Record property, plant, and equipment transactions; prepare
partial financial statements.
Complex
40-50
10B
Correct errors in recording intangible asset transactions.
Complex
25-35
11B
Record intangible asset transactions; prepare partial balance
sheet.
Moderate
30-40
12B
Record equipment and natural resource transactions; prepare Moderate
partial financial statements.
30-40
13B
Calculate ratios and comment.
15-25
Moderate
Solutions Manual
9-3
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BLOOM’S TAXONOMY TABLE
Correlation Chart between Bloom's Taxonomy, Study Objectives and End-ofChapter Exercises and Problems
Study Objective
1. Apply the cost
principle to property,
plant, and
equipment.
2. Explain and
calculate
amortization.
3. Revise periodic
amortization.
4. Account for the
disposal of property,
plant, and
equipment.
5. Calculate and record
amortization of
natural resources.
6. Identify the basic
accounting issues
for intangible assets.
7. Illustrate the
reporting and
analysis of long-lived
assets.
Broadening Your
Perspective
Knowledge Comprehension
Application
BE9-3
Q9-1
BE9-1
P9-3A
Q9-2
BE9-2
P9-4A
Q9-3
BE9-4
P9-6A
Q9-4
E9-1
P9-1B
E9-2
P9-3B
E9-11
P9-4B
P9-1A
P9-6B
Q9-6
Q9-5
BE9-5
P9-7A
Q9-7
BE9-6
P9-8A
BE9-7
Q9-8
P9-9A
BE9-8
P9-12A
BE9-9
P9-2B
E9-2
P9-3B
E9-3
P9-7B
E9-4
P9-8B
E9-11
P9-9B
P9-2A
P9-12B
P9-3A
Q9-9, Q9-10,
BE9-10 P9-6A
Q9-11
BE9-11 P9-9A
E9-5
P9-4B
E9-6
P9-5B
E9-7
P9-6B
P9-4A
P9-9B
P9-5A
Q9-12
Q9-13
BE9-12 P9-8A
BE9-13 P9-9A
BE9-14 P9-7B
E9-8
P9-8B
E9-9
P9-9B
P9-7A
Q9-14, Q9-15
BE9-15
E9-10
P9-12A
P9-12B
Q9-16, Q9-17,
BE9-16
Q9-18, Q9-19
E9-11
P9-11A
E9-12
P9-10B
P9-10A P9-11B
Q9-20,
Q9-21
BE9-18 P9-11A
BE9-17
BE9-19 P9-12A
E9-13
P9-9B
P9-9A
P9-11B
P9-12B
Continuing
Cookie Chronicle
BYP9-1 BYP9-2
BYP9-3
Analysis Synthesis Evaluation
E9-14
P9-13A
P9-13B
BYP9-4
BYP9-5
Solutions Manual
9-4
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
ANSWERS TO QUESTIONS
1.
For long-lived assets, the cost principle means that cost consists of all
expenditures necessary to acquire the asset and make it ready for its
intended use. These costs are capitalized rather than expensed, because
they will provide benefits over future periods.
2.
All three amounts will be debited to the land account. The cost to
purchase the land and building as well as the cost to remove the building
is recorded in the land account. These costs are incurred to prepare the
land for its intended use. Since the old building is destroyed none of the
purchase cost is allocated to Buildings. As well, the costs to grade the
land are incurred to prepare the land for its intended use. Land will be
debited for $505,000 ($430,000 + $45,000 + $30,000).
3.
The cost principle has survived because it provides information that is
objective and verifiable, whereas market values are subjective and
changeable. In addition, if a company is not planning on selling the asset
the market value of the asset is not relevant.
4.
The purchase cost must be split between the land and building because
the building is amortized and the land is not. In addition, the cost of each
item will be necessary if the land, or the building, is later sold to determine
any gain or loss on disposal.
5.
The purpose of amortization is to allocate the cost of a long-lived,
amortizable asset over its useful life in a systematic way. Amortization
expense is matched to the revenues it has helped generate.
A common misunderstanding about amortization is that amortization
attempts to measure an asset’s market value or real value. There is no
attempt to measure the change in a long-lived asset’s real value because
long-lived assets are not held for resale. Another common
misunderstanding is that accumulated amortization results in the
accumulation of cash to purchase or replace the long-lived asset.
Accumulated amortization represents the total cost of the asset that has
been allocated to expense so far—it does not represent a cash fund.
6.
(a) Residual value is the expected cash value of the asset at the end of
its useful life. It is sometimes called salvage value or trade-in value.
Residual value is not amortized, since this is the amount expected to
be recovered at the end of an asset’s useful life.
Solutions Manual
9-5
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
QUESTIONS (Continued)
Question 6 (Continued)
(b) Residual value is subtracted from cost to determine the amortizable
cost of the asset. Residual value limits the total value of amortization
that can be taken for all three methods of amortization. Amortization
will stop when the asset’s book value equals its expected residual
value.
In the straight-line and the units-of-activity methods of calculating
amortization, residual value is used in calculating the amortizable cost
per year or the amortizable cost per unit. Residual value is not used in
determining the amount that the declining-balance amortization rate is
applied to. Under all three methods net book value should never be
reduced below residual value. In other words, amortization stops
when the asset’s net book value is equal to its expected residual
value.
7.
Net book value is cost less accumulated amortization of an asset. Cost is
the same under each method of amortization. In the early years, net book
value will be less under the declining-balance method than under the
straight-line method. The units-of-activity method is unpredictable. In all
three methods, net book value at the end of the asset’s useful life, will be
equal to the asset’s residual value.
The amortization expense is constant under the straight-line method,
varies according to production under the units-of-activity method and
declines over time with the declining-balance method. In the early years
amortization expense will be higher under the declining-balance method
than the straight-line method. The units-of-activity method is
unpredictable.
Consequently, assuming no other changes, net income is constant under
the straight-line method, varies according to production under the units-ofactivity method, and increases over time with the declining-balance
method. In the early years, net income will be higher under the straightline method than the declining-balance method. It is unpredictable under
the units-of-activity method. All three methods will result in the same total
amortization expense over the asset’s useful life.
Solutions Manual
9-6
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
QUESTIONS (Continued)
8.
Ralph’s plan will not work. For accounting purposes, a company should
choose the amortization method that best matches expenses to revenues.
For tax purposes income tax regulations require a company to use the
single declining-balance method. Amortization is calculated on a class basis
and a specified rate is specifically identified for specific types of classes of
assets.
9.
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 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.
10. A permanent decline in the market value of a long lived asset is called an
impairment loss. It occurs when the market value of a long-lived asset falls
far below its book value and is not expected to recover, and the company
does not expect to recover the net book value from future cash flows. It
could occur when a machine has become obsolete or the market for a
product made by a machine becomes obsolete.
11. A revision of amortization is made in current and future years but not
retroactively. Amortization is based on the best available information at the
time the estimate was made. Continual restatement of prior periods would
adversely affect the reader's confidence in the financial statements; thus,
prior periods should not be restated if amortization is revised.
12. In a sale of property, plant or equipment, the net book value of the asset is
compared to the proceeds received from the sale. If the proceeds of the
sale exceed the net book value of the asset, a gain on disposal occurs. If
the proceeds of the sale are less than the net book value of the asset sold,
a loss on disposal occurs.
In an exchange a new asset is received in an exchange for the old asset
given up. If cash is part of the exchange and the amount is considered
significant it is considered a monetary exchange. The gain or loss is
calculated by comparing the fair value of the asset given up to its net book
value. The trade-in allowance on the asset given up is not relevant. If the
cash involved in the exchange is not significant—or if there is no cash—
then the exchange is considered a nonmonetary exchange. The gain or loss
is still calculated the same way unless the fair values of the assets cannot
be determined. In that case no gain or loss is recorded.
Solutions Manual
9-7
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
QUESTIONS (Continued)
13.
The asset and related accumulated amortization should continue to be
reported on the balance sheet, without further amortization or adjustment,
until the asset is retired. Reporting the asset and related accumulated
amortization 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 amortized, no additional amortization should be
taken on this asset, even if it is still being used. In no situation can the
accumulated amortization exceed the cost of the asset.
14.
(a) The amortizable cost of a natural resource includes cost less residual
value. In calculating the amortization expense for natural resources,
the amortizable cost is expressed on a per unit basis, divided by the
total production or activity anticipated. The amortizable cost per unit is
then multiplied by the actual production output or activity sold for the
period.
(b) Amortization is initially recorded as a current asset, inventory,
because it is part of the cost of extracting the natural resource. The
amortization becomes part of the cost of goods sold when the
inventory is sold.
15.
The amortization of natural resources is recorded as inventory and not as
an expense because the resource extracted is expected to be sold. Until
the resource is sold, it has a future benefit and all the costs of obtaining
this resource are recorded as an asset, inventory. The cost is later
expensed, as cost of goods sold, when the extracted resource is sold.
16.
Intangible assets are rights, privileges and competitive advantages that
result from ownership of long-lived assets. They have a future benefit in
that they contribute to future revenue, however, they lack physical
existence or substance.
17.
Flin Company should amortize the patent over its 20 year legal life or its
useful life, whichever is shorter. Flin Company must consider when its
patent is likely to become ineffective at contributing to revenue and if this
will occur before the end of its legal life.
18.
Goodwill is the value of many favourable attributes that are intertwined in
a business enterprise. Goodwill can be identified only with the business as
a whole and, unlike other assets, cannot be sold separately. Goodwill can
only be sold if the entire business is sold.
Solutions Manual
9-8
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
QUESTIONS (Continued)
19.
Research and development costs present several accounting problems. It
is sometimes difficult to assign the costs to specific projects, and there are
uncertainties in identifying the extent and timing of future benefits. As a
result, all research and some development costs are recorded as an
expense. Only certain development costs with reasonably assured future
benefits can be capitalized. This is intended to maintain the objectivity and
reliability of the financial statements.
20.
Property, plant, and equipment and natural resources are often combined
and reported in the balance sheet as “property, plant, and equipment” or
“capital assets”. Goodwill must be disclosed separately. Other intangibles
can be grouped under “intangible assets”. Amortization expense for the
period should 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 balance of the major
classes of amortizable assets and the amortization method(s) and rates
used. The book value of each major class of unamortized assets should
also be disclosed. Companies should also disclose their impairment policy
in the notes to the financial statements.
21.
The asset turnover and return on asset ratios show how effectively the
company uses its long-lived assets. The asset turnover shows the amount
of sales produced for each dollar invested in assets. It is calculated by
dividing net sales by average total assets. The return on assets measures
overall profitability. It is calculated by dividing net income by average total
assets.
Solutions Manual
9-9
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 9-1
The cost of the land is $61,000 ($50,000 + $5,000 + $2,500 +
$3,500). The installation of the fence should be debited to Land
Improvements account.
BRIEF EXERCISE 9-2
The cost of the truck is $43,000 (cash price $41,750 + painting
and lettering $750 + installation of trailer hitch $500). The
expenditures for the insurance and the motor vehicle licence
are recurring and only benefit the current period. They should
be expensed and not added to the cost of the truck.
BRIEF EXERCISE 9-3
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
O
C
C
O
C
O
O
C
C
O
Solutions Manual
9-10
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-4
Jan. 1
Land
[$400,000 x ($127,500 ÷ $425,000)] .... 120,000
Building
[$400,000 x ($255,000 ÷ $425,000)] .... 240,000
Equipment
[$400,000 x ($42,500 ÷ $425,000)] ...... 40,000
Cash ................................................
Mortgage Payable ($400,000 - $100,000)
100,000
300,000
BRIEF EXERCISE 9-5
Amortizable cost is $40,000 ($43,000 - $3,000). With a 4-year
useful life, annual amortization is $10,000 ($40,000  4). Under
the straight-line method, amortization is the same each year.
Thus, amortization expense is (a) $10,000 for each year of the
truck’s life and (b) $40,000 in total over the truck’s life.
BRIEF EXERCISE 9-6
The declining-balance rate is 50% (25% x 2) and this rate is
applied to net book value at the beginning of the year.
Amortization expense for each year is as follows:
(a)
Calculation
End of Year
NBV (Beg.
Amort.
Amort.
Accum. Net Book
Year of Year
X
Rate = Expense
Amort.
Value
$43,000
2008
$43,000
50%
$21,500
$21,500
21,500
2009
21,500
50%
10,750
32,250
10,750
2010
10,750
50%
5,375
37,625
5,375
2011
5,375
50%
2,375¹
40,000
3,000
¹Limited to the amount to reduce the net book value to the
residual value of $3,000
(b) Total amortization over the truck’s useful life is $40,000.
Solutions Manual
9-11
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-7
Amortizable cost per unit:
($33,000 - $500)  325,000 km. = $0.10/km.
Annual amortization expense:
2007:
125,000 x $0.10 = $12,500
2008:
105,000 x $0.10 = $10,500
BRIEF EXERCISE 9-8
(a) Amortization expense for each year:
Calculation
Amortizable
Amort.
Year
Cost*
X
Rate =
Amort.
Expense
2008
2009
2010
2011
2012
$ 7,500
10,000
10,000
10,000
2,500
$40,000
40,000
40,000
40,000
40,000
25% x 9/12
25%
25%
25%
25% x 3/12
End of Year
Accum. Net Book
Amort.
Value
$43,000
$ 7,500
35,500
17,500
25,500
27,500
15,500
37,500
5,500
40,000
3,000
*Amortizable cost = $43,000 - $3,000
(b) Total amortization expense over the truck’s useful life is
$40,000. (See accumulated amortization at end of 2012
above)
Solutions Manual
9-12
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-9
The double declining-balance rate is 50% (25% x 2) and this rate
is applied to net book value at the beginning of the year.
Amortization expense for each year is as follows:
(a)
Double Declining-Balance
Calculation
NBV (Beg.
Amort.
Year of Year
X
Rate =
Amort.
Expense
2008
2009
2010
2011
2012
$16,125
13,438
6,719
3,359
359¹
$43,000
26,875
13,437
6,718
3,359
50% x 9/12
50%
50%
50%
50%
End of Year
Accum. Net Book
Amort.
Value
$43,000
$16,125
26,875
29,563
13,437
36,282
6,718
39,641
3,359
40,000
3,000
¹ Limited to the amount to bring net book value to the residual
value of $3,000
(b) Total amortization expense over the truck’s useful life is
$40,000. (See accumulated amortization at end of 2012
above)
BRIEF EXERCISE 9-10
Loss on Impairment ...................................
Accumulated Amortization—Machinery
Calculation:
Net Book Value ($90,000 - $54,000) ...
Less: Market Value ............................
Impairment loss..................................
16,000
16,000
$36,000
20,000
$16,000
Solutions Manual
9-13
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-11
Amortization expense from 2005 to 2007:
[($60,000 - $4,000) ÷ 7 years = $8,000]
2005
2006
2007
Total
$ 8,000
8,000
8,000
$24,000
Net book value, Jan. 1, 2008 ($60,000 - $24,000)........... $36,000
Add: Equipment up-grade .............................................
9,000
Less: Revised residual value ........................................
(3,000)
Remaining amortizable cost ...........................................
42,000
Remaining useful life (9 years - 3 years) ....................... ÷ 6 years
Revised annual amortization expense 2008 .................. $ 7,000
BRIEF EXERCISE 9-12
(a)
Accumulated Amortization—
Delivery Equipment ....................................
Delivery Equipment ...............................
41,000
(b) Accumulated Amortization—
Delivery Equipment ....................................
Loss on Disposal........................................
Delivery Equipment ...............................
38,000
3,000
41,000
Cost of delivery equipment ...................................
Less: Accumulated amortization ..........................
Net book value at date of disposal........................
Proceeds from sale ................................................
Loss on disposal ....................................................
41,000
$41,000
38,000
3,000
0
$ 3,000
Solutions Manual
9-14
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-13
(a) Sept. 30
Amortization Expense
[($72,500 - $2,500) ÷ 5 x 9/12]......... 10,500
Accumulated Amortization
—Office Equipment ..................
10,500
(b) Sept. 30
Cash ................................................ 8,250
Accumulated Amortization—Office
Equipment¹ ..................................... 66,500
Gain on Disposal ......................
2,250
Office Equipment ......................
72,500
¹[($72,500 - $2,500) ÷ 60 months x 57 months] = $66,500
Cost of office equipment
$72,500
Less accumulated amortization
66,500
Net book value at date of disposal
6,000
Proceeds from sale
08, 8,250
Gain on disposal
$ 2,250
(c) Sept. 30
Cash ................................................ 4,500
Accumulated Amortization—Office
Equipment ....................................... 66,500
Loss on Disposal ............................
1,500
Office Equipment ......................
72,500
Cost of office equipment
$72,500
Less accumulated amortization
66,500
Net book value at date of disposal 6,000
Proceeds from sale
4,500
Loss on disposal
$ 1,500
Solutions Manual
9-15
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-14
Jan. 7
Machinery (new) ............................
Accumulated Amortization
—Machinery ...................................
Loss on Disposal...........................
Machinery (old) .........................
Cash ($80,000 - $18,000)...........
76,000*
78,000
3,000**
95,000
62,000
*Consideration paid cash plus market value of old asset:
($62,000 + $14,000 = $76,000)
**Loss is the book value less the fair market value:
($95,000 - $78,000 - $14,000 = $3,000)
BRIEF EXERCISE 9-15
(a)
Amortizable cost
= $7,000,000 - $500,000
= $6,500,000
Amortizable cost per unit
= $6,500,000 ÷ 28,000,000 tonnes
= $0.2321 per tonne
Amortization cost for ore extracted in Year 1:
$0.2321 per tonne x 6,000,000 tonnes = $1,392,600
Aug.
31 Inventory .................................. 1,392,600
Accumulated Amortization .
1,392,600
Amortization to be included in cost of goods sold:
$0.2321 per tonne x 5,000,000 tonnes = $1,160,500
Amortization to be included in inventory:
$0.2321 per tonne x 1,000,000 tonnes = $232,100
Solutions Manual
9-16
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-15 (Continued)
(b)
CUONO MINING CO.
Balance Sheet (Partial)
August 31, 2008
Assets
Current assets
Inventory ..................................................
$232,100*
Property, plant, and equipment
Ore mine ................................................... $7,000,000
Less: Accumulated amortization ........... 1,392,600 5,607,400
* Check ($1,392,600 - $1,160,500 = $232,100)
Solutions Manual
9-17
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-16
(a)
2008
Jan.
2 Patents ....................................
Cash....................................
180,000
180,000
(b) Dec. 31 Amortization Expense
($180,000  10) ........................
18,000
Accumulated Amortization—
Patents ...............................
(c)
2009
Jan.
5 Patents ....................................
Cash....................................
(d) Original cost of patent: ..................................
Less: accumulated amortization ...................
Plus: Legal costs to defend ...........................
Remaining cost to be amortized ...................
Remaining useful life (10 years - 1 year) ......
Revised annual amortization expense 2009 .
18,000
9,000
9,000
$180,000
(18,000)
9,000
171,000
÷ 9 years
$ 19,000
BRIEF EXERCISE 9-17
(a)
(b)
(c)
(d)
(e)
(f)
(g)
I
PPE
NR
NA (current asset)
I
PPE
NA (current asset)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
NA (income statement)
I
I
NA (current liability)
PPE
PPE
NR
Solutions Manual
9-18
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-18
CANADIAN TIRE CORPORATION, LIMITED
Balance Sheet (Partial)
December 31, 2005
(in millions)
Property, plant, and equipment
Land ..............................................................
$ 700.5
Buildings ......................................................... $2,094.4
Less: Accumulated amortization ..................
704.4 1,390.0
Fixtures and equipment ................................. $528.4
Less: Accumulated amortization ..................
347.5
180.9
Leasehold improvements............................... $265.6
Less: Accumulated amortization ..................
91.3
174.3
Other property, plant, and equipment .........................
298.2
Total property, plant, and equipment
2,743.9
Intangible assets
Goodwill ......................................................................
Marks Work Wearhouse store brands and banners.
Marks Work Wearhouse franchise agreements ..........
Total intangible assets
$46.2
50.4
2.0
98.6
Solutions Manual
9-19
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BRIEF EXERCISE 9-19
($ in millions)
Return on assets
$283
[($2,785 + $2,661) ÷ 2]
= 10.39%
Asset turnover
$3,294
[($2,785 + $2,661) ÷ 2]
= 1.21 times
Solutions Manual
9-20
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
SOLUTIONS TO EXERCISES
EXERCISE 9-1
(a)
Under the cost principle, the acquisition cost of a property,
plant, and equipment includes all expenditures necessary
to acquire the asset and make it ready for its intended use.
This includes not only the cost of acquisition, but any
freight, installation, testing, and similar costs to get the
asset ready for use. For example, the cost of factory
machinery includes the purchase price, freight costs paid
by the purchaser, insurance costs during transit, and
installation costs. Costs such as these benefit the life of
the factory machinery and not just the current period.
Consequently, they should be capitalized and amortized
over the machinery’s useful life.
Cost is measured by the cash paid in a cash transaction,
or by the cash equivalent price paid when noncash assets
are used in payment. The cash equivalent price is equal to
the fair market value of the asset given up. If that value is
not clearly determinable, the fair market value of the asset
received is used instead.
(b) 1. Delivery Equipment (or Vehicles)
2. Prepaid Insurance
3. Land
4. Land ($6,600 - $1,700 = $4,900)
5. Plant
6. Plant
7. Plant
8. Land improvements
9. Factory machinery
10. Factory machinery
Solutions Manual
9-21
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-2
(a)
Land
Building
Land Improvements
Appraised
Value
$366,000
192,000
42,000
$600,000
% of Total
61%
32%
7%
Cost Allocated
$353,800
185,600
40,600
$580,000*
*Total cost $75,000 (cash) + $500,000 (mortgage) + $5,000
(legal fees) = $580,000
(b) Land .........................................................
Land Improvements ................................
Building ....................................................
Cash ($75,000 + $5,000) ..........................
Mortgage Payable ...............................
(c)
353,800
40,600
185,600
80,000
500,000
Amortizable cost for the building is $165,600 ($185,600 –
$20,000). With a 40-year useful life, annual amortization
expense is $4,140 ($165,600  40).
Amortizable cost for the land improvements is $40,600.
With a ten year useful life, annual amortization expense is
$4,060 ($40,600  10).
Solutions Manual
9-22
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-3
(a)
(1) Straight-line
Calculation
Amortizable
Amort.
Year
Cost*
X
Rate =
Amort.
Expense
2007
2008
2009
2010
2011
$28,500
28,500
28,500
28,500
28,500
$142,500
142,500
142,500
142,500
142,500
20%
20%
20%
20%
20%
End of Year
Accum. Net Book
Amort.
Value
$164,500
$28,500
136,000
57,000
107,500
85,500
79,000
114,000
50,500
142,500
22,000
* $164,500 - $22,000 = $142,500
(2) Double Declining-Balance
Calculation
NBV (Beg.
Amort.
Year of Year
X
Rate =
Amort.
Expense
2007
2008
2009
2010
2011
$65,800
39,480
23,688
13,532¹
0
$164,500
98,700
59,220
35,532
22,000
40%
40%
40%
40%
40%
End of Year
Accum. Net Book
Amort.
Value
$164,500
$65,800
98,700
105,280
59,220
128,968
35,532
142,500
22,000
142,500
22,000
¹ Limited to the amount to bring net book value to the residual
value of $22,000
Solutions Manual
9-23
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-3 (Continued)
(a) (Continued)
(3)
Year
2007
2008
2009
2010
2011
Units-of-Activity
Calculation
Units of
Amort.
Activity X Cost/Unit* =
78,000
76,000
72,000
74,000
75,000
$0.38
0.38
0.38
0.38
0.38
Amort.
Expense
$29,640
28,880
27,360
28,120
28,500
End of Year
Accum. Net Book
Amort.
Value
$164,500
$29,640
134,860
58,520
105,980
85,880
78,620
114,000
50,500
142,500
22,000
*Amortizable cost per unit is $0.38 per kilometre:
[($164,500 – $22,000)  375,000 = $0.38]
(b) I recommend it use the units-of-activity method as it
results in the best matching of expense with revenue.
Solutions Manual
9-24
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-4
(a)
(1) Straight-line
Calculation
Amortizable
Amort.
Year
Cost*
X
Rate =
2007
2008
2009
2010
2011
$78,000
78,000
78,000
78,000
78,000
25%
25%
25%
25%
25%
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$86,000
$4,875** $4,875
81,125
19,500
24,375
61,625
19,500
43,875
42,125
19,500
63,375
22,625
14,625*** 78,000
8,000
*$86,000 - $8,000 = $78,000
**$19,500 x 3/12 = $4,875
***$19,500 x 9/12 = $14,625
(2)
Double Declining-Balance
Calculation
NBV (Beg.
Amort.
Year of Year
X
Rate =
2007
2008
2009
2010
2011
$86,000
75,250
37,625
18,812
9,406
50%
50%
50%
50%
50%
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$86,000
$10,750* $10,750
75,250
37,625
48,375
37,625
18,813
67,188
18,812
9,406
76,594
9,406
1,406** 78,000
8,000
*$86,000 x 50% x 3/12 = $10,750
**Limited to the amount to bring net book value to the residual
value of $8,000
Solutions Manual
9-25
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-4 (Continued)
(a) (Continued)
(3)
Year
2007
2008
2009
2010
2011
Units-of-Activity
Calculation
Units of
Amort.
Activity X Cost/Unit* =
500
2,800
2,900
2,600
1,300
$7.80
7.80
7.80
7.80
7.80
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$86,000
$3,900
$3,900
82,100
21,840
25,740
60,260
22,620
48,360
37,640
20,280
68,640
17,360
9,360** 78,000
8,000
*Amortizable cost per unit is $7.80/hour
[($86,000 – $8,000)  10,000 = $7.80]
**Limited to the amount to bring net book value to the residual
value of $8,000.
(b) Over the life of the asset, amortization expense will be the
same for all three methods.
(c)
Cash flow is the same under all three methods.
Amortization is an allocation of the cost of a long-lived
asset and not a cash expenditure.
Solutions Manual
9-26
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-5
Jan. 10
Apr. 8
Sep. 2
Nov. 1
Dec. 31
Building ...................................... 70,000
Cash.......................................
70,000
Repairs Expense ....................... 25,000
Cash.......................................
25,000
Equipment.................................. 22,500
Cash.......................................
22,500
Repairs Expense .......................
Cash.......................................
1,000
Loss on Impairment .................. 120,000
Accumulated Amortization—
Equipment .............................
[($500,000 - $150,000) - $230,000]
1,000
120,000
Solutions Manual
9-27
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-6
(a)
Current amortization
Building: ($800,000 – $40,000) ÷ 20 yrs
= $38,000 per year
Equipment: ($120,000 – $5,000) ÷ 5 yrs
= $23,000 per year
(b) Current ages
Building January 1998 to January 2008: 10 years
Equipment January 2006 to January 2008: 2 years
January 1, 2008
Cost .......................................................
Accumulated Amortization:
Building (10 x $38,000) ......................
Equipment (2 x $23,000) ....................
Net book value ......................................
Building Equipment
$800,000 $120,000
380,000
$420,000
46,000
$ 74,000
(c)
Type of Asset
Building
Net book value, 1/1/08
Less: Residual value
Revised amortizable cost
$420,000
62,000
$358,000
$74,000
3,600
$70,400
(25 - 10)
÷ 15 yrs
(4 - 2)
÷ 2 yrs
$23,867
$35,200
Divide by revised remaining
useful life, in years
Revised annual
amortization expense
Equipment
Solutions Manual
9-28
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-7
(a)
2007
June 30 Amortization Expense ...............
Accumulated Amortization
—Equipment .........................
[($30,000 - $4,000) ÷ 4 years]
(b) July
(c)
1 Equipment ($5,000 + $500) .......
Cash.......................................
2008
June 30 Amortization Expense ...............
Accumulated Amortization
—Equipment .........................
6,500
6,500
5,500
5,500
5,200
Net book value, July 1, 2007 ($30,000 - $6,500) .....
Add: New part ..........................................................
(d)
5,200
Less: Revised residual value ................................
Remaining amortizable cost ...................................
Remaining useful life (6 - 1) ....................................
Revised annual amortization expense ...................
$23,500
5,500
29,000
3,000
$26,000
÷ 5 years
$ 5,200
Cost ($30,000 + $5,500) ..........................................
Accumulated Amortization ($6,500 + $5,200) .......
Net book value June 30, 2008 ...............................
$35,500
11,700
$23,800
Solutions Manual
9-29
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-8
Jan. 2 Delivery Truck (New)
($6,500 + $33,000)* ............................. 39,500
Accumulated Amortization ................ 22,500
Loss on sale ....................................... 1,000
Delivery truck (Old) ........................
Cash ................................................
30,000
33,000
*Fair value of old truck $6,500 + cash $33,000
Mar. 31 Amortization Expense ........................
Accumulated Amortization
—Machinery ...................................
($62,000 ÷ 10 years x 3/12)
1,550
1,550
31 Accumulated Amortization
—Machinery [($62,000 ÷ 10 years) x
(9 years + 3 months)] ......................... 57,350
Loss on Disposal................................ 4,650
Machinery .......................................
Sept 1 Amortization Expense ........................
Accumulated Amortization ............
—Office Equipment .......................
($5,490 ÷ 3 years x 8/12)
62,000
1,220
1 Cash ....................................................
800
Accumulated Amortization
—Office Equipment ............................ 4,880
($5,490 ÷ 3 years x 2 years + 8 months)
Gain on Disposal ..........................
Office Equipment ...........................
1,220
190
5,490
Solutions Manual
9-30
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-9
(a)
(1)
(2)
Straight-line method: ($16,000 - $1,000) ÷ 4 years
= $3,750 per year or $7,500 for 2006 and 2007.
Double declining-balance method
DDB Rate: ¼ x 2 = 50%
2006: $16,000 x 50% = $8,000
2007: $16,000 - $8,000 = $8,000 x 50% = $4,000
Total amortization expense for 2006 and 2007 = $12,000
(b) (1)
Straight-line method
Proceeds - Net book value = Gain (loss)
[$5,000 - ($16,000 - $7,500)] = ($3,500)
(2)
Double declining-balance method
Proceeds - Net book value = Gain (loss)
[$5,000 - ($16,000 - $12,000) = $1,000
(c) The amount of the loss using the straight-line method is
$3,500. The amount of the gain using the double-decliningbalance method is $1,000. The amounts are not the same
because of the difference in the amortization expense
calculation on a year to year basis which impacts the net
book value of the asset which in turn impacts the gain or
loss on disposal.
If you consider, however, the total impact on net income
over the two year period the amounts are identical. Using
the straight-line method total amortization is $7,500 and
loss on disposal is $3,500 resulting in an $11,000 decrease
in net income over the two year period. Using the doubledeclining-balance method total amortization is $12,000 and
gain on disposal is $1,000. Overall effect on net income
using both methods over the two year period is an $11,000
decrease.
Solutions Manual
9-31
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-10
(a)
The units-of-activity method is recommended for
amortizing natural resources because it results in the best
matching of expense to revenues. It requires that an
estimate can be made of the total number of units that are
available to be extracted from the resource.
(b) Dec. 31 Inventory ($0.5375 x 100,000) ... 53,750
Accumulated Amortization—Mine
53,750
Amortizable cost $520,000 - $90,000 = $430,000
Amortizable cost per unit:
$430,000 ÷ 800,000 t = $0.5375 per tonne
(c)
PHILLIPS INC.
Income Statement (Partial)
Year Ended December 31, 2008
Cost of goods sold: (will include this amount plus other costs)
($0.5375 x 75,000 t) ..................................... $40,313
PHILLIPS INC.
Balance Sheet (Partial)
December 31, 2008
Assets
Current assets
Inventory ($53,750 - $40,313) .................................. $ 13,437*
Property, plant, and equipment
Ore mine ..................................................... $520,000
Less: Accumulated amortization .............. 53,750 466,250
*Check: 25,000** t unsold x $0.5375 = $13,437
**100,000 t extracted – 75,000 t sold = 25,000 t in inventory
Solutions Manual
9-32
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-11
1.
Amortization is the process of allocating the cost of a longlived asset to expense over the asset’s useful life. Because
the value of land generally does not decline with time and
usage, its usefulness and revenue producing ability does
not decline. In addition, the useful life of land is indefinite.
Therefore it would be incorrect for the student to amortize
the land. This is a violation of the matching principle.
2.
Goodwill is an intangible asset with an indefinite life.
According to generally accepted accounting principles,
goodwill is not amortized but reviewed annually for
impairment. If a permanent decline in value has occurred
the goodwill is written down and an impairment loss is
recorded on the income statement. Therefore, the
amortization entry should be reversed and no decline in
value recorded until an impairment in value occurs.
Recording amortization is a violation of the matching
principle.
3.
This is a violation of the cost principle. Because current
market values are subjective and not reliable, they are not
used to increase the recorded value of an asset after
acquisition. The appropriate accounting treatment is to
leave the building on the books at its zero book value.
Solutions Manual
9-33
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-12
(a)
Jan. 2 Patents .............................................
Cash .............................................
45,000
April 1 Trademark ........................................
Cash .............................................
325,000
July 1 Franchise .........................................
Cash .............................................
250,000
Sept. 1 Research Expense ..........................
Cash .............................................
185,000
45,000
325,000
250,000
185,000
(b)
Dec. 31 Loss on Impairment—Goodwill ......
Goodwill ......................................
85,000
31 Amortization Expense .................... 117,500
Accumulated Amortization—Patents
[($450,000 ÷ 5) + (45,000 ÷ 3)] .....
Accumulated Amortization—
Franchise [($250,000 ÷ 10) x 6/12]
85,000
105,000
12,500
Solutions Manual
9-34
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-13
(a)
Account
Accumulated Amortization
– Building
Accumulated Amortization
– Finite-Life Intangible
Assets
Accumulated Amortization
– Machinery and Equipment
Accumulated Amortization
– Other Property, Plant, and
Equipment
Accumulated Amortization
– Satellites
Accumulated Amortization
– Telecommunications
Assets
Amortization Expense
Buildings
Financial Statement
Balance Sheet
Cash and Cash Equivalents
Common Shares
Finite-Life Intangible Assets
Goodwill
Indefinite-Life Intangible
Assets
Land
Balance Sheet
Balance Sheet
Balance Sheet
Balance Sheet
Balance Sheet
Machinery and Equipment
Balance Sheet
Other Long-term Assets
Other Property, Plant, and
Equipment
Plant under Construction
Balance Sheet
Balance Sheet
Satellites
Balance Sheet
Telecommunications
Assets
Balance Sheet
Balance Sheet
Balance Sheet
Balance Sheet
Balance Sheet
Balance Sheet
Income Statement
Balance Sheet
Balance Sheet
Balance Sheet
Section
Property, Plant, and
Equipment
Intangibles
Property, Plant, and
Equipment
Property, Plant, and
Equipment
Property, Plant, and
Equipment
Property, Plant, and
Equipment
Operating Expenses
Property, Plant, and
Equipment
Current Assets
Shareholders’ Equity
Intangibles
Intangibles
Intangibles
Property, Plant, and
Equipment
Property, Plant, and
Equipment
Long-Term Assets
Property, Plant, and
Equipment
Property, Plant, and
Equipment
Property, Plant, and
Equipment
Property, Plant, and
Equipment
Solutions Manual
9-35
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-13 (Continued)
(b)
BCE Inc.
Balance Sheet (Partial)
December 31, 2005
(in millions)
Property, plant, and equipment
Land .............................................................................
Buildings ...................................................... $3,157
Less: Accumulated amortization ................
1,340
Plant under construction ............................
Machinery and equipment ........................... $6,273
Less: Accumulated amortization ................
3,685
Telecommunications assets ....................... $36,334
Less: Accumulated amortization ................ 24,144
Satellites ....................................................... $1,552
Less: Accumulated amortization ...............
404
Other Property, plant, and equipment ........
$200
Less: Accumulated amortization ...............
66
Total Property, plant, and equipment ...................
Intangible assets
Finite-life intangible assets ........................
$3,813
Less: Accumulated amortization ...............
1,574
Goodwill ......................................................................
Indefinite-life intangible assets .................................
Total intangible assets ..........................................
$
94
1,817
1,852
2,588
12,190
1,148
134
19,823
2,239
7,887
3,031
13,157
Solutions Manual
9-36
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
EXERCISE 9-14
(a) (in thousands)
December 31, 2005
January 1, 2005
Asset
$206,674
$211,476
turnover [($308,226 + $300,152) ÷ 2] [($300,152 + $242,755) ÷ 2]
= 0.68 times
Return
on
assets
= 0.78 times
$8,097
$14,426
[($308,226 + $300,152) ÷ 2] [($300,152 + $242,755) ÷ 2]
= 2.7%
= 5.3%
(b) Sleeman’s asset turnover has decreased over the 2 years.
Net Revenues have decreased from $211,476 to $206,674
even though total assets have increased from $300,152 to
$308,226. Sleeman is operating less efficiently in the year
ended December 31, 2005 as compared to the year ended
January 1, 2005. Return on assets has decreased
significantly from 5.3% to 2.7%. The slight increase in total
assets from $300,152 to $308,336 has not generated an
increase in net income. In fact, net income has fallen from
$14,426 to $8,097.
Solutions Manual
9-37
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
SOLUTIONS TO PROBLEMS
PROBLEM 9-1A
(a)
Feb.
7 Land ........................................... 275,000
Cash.......................................
Note Payable .........................
9 Land ...........................................
Cash......................................
5,500
5,500
15 Land ........................................... 15,000
Cash.......................................
17 Cash ...........................................
Land .......................................
Mar.
July
75,000
200,000
15,000
4,000
4,000
2 Building ...................................... 18,000
Cash.......................................
18,000
5 Building ...................................... 650,000
Cash.......................................
Note Payable .........................
170,000
480,000
31 Building ......................................
Cash.......................................
6,500
6,500
Aug. 22 Land Improvements .................. 12,000
Cash.......................................
Sept. 1 Prepaid Insurance .....................
Cash.......................................
12,000
2,500
Dec. 31 Interest Expense ....................... 17,500
Cash.......................................
2,500
17,500
Solutions Manual
9-38
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-1A (Continued)
(b)
Date
2008
Feb. 7
9
15
17
Date
2008
Mar. 2
July 5
31
Date
2008
Aug. 22
Explanation
Land
Ref.
Debit
Credit Balance
275,000
5,500
15,000
275,000
280,500
295,500
291,500
4,000
Explanation
Building
Ref.
Debit
Credit Balance
18,000
650,000
6,500
18,000
668,000
674,500
Land Improvements
Explanation
Ref. Debit
Credit Balance
12,000
12,000
The cost of land that will appear on Weisman’s December 31,
2008 balance sheet will be $291,500. The cost of building that
will appear on Weisman’s December 31, 2008 balance sheet will
be $674,500. The cost of land improvements that will appear on
Weisman’s December 31, 2008 balance sheet will be $12,000.
Solutions Manual
9-39
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-2A
(a)
Year
Calculation
Accumulated
Amortization
Dec. 31
MACHINE 1 – Straight-line Amortization
2006
2007
2008
($44,940* ÷ 7) x 10/12 = $5,350
$44,940 ÷ 7 = $6,420
$44,940 ÷ 7 = $6,420
$ 5,350
11,770
18,190
*$48,940 - $4,000 = $44,940
MACHINE 2 – Declining-balance Amortiation
2007
2008
$84,000 x 20%* x 4/12 = $5,600
($84,000 - $5,600) x 20% = $15,680
$ 5,600
21,280
*1/10 years = 10% x 2 = 20%
Solutions Manual
9-40
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-2A (Continued)
(b)
Year
Calculation
Accumulated
Amortization
Dec. 31
MACHINE 1
2006
2007
2008
($44,940* ÷ 7) x 1/2 = $3,210
$44,940 ÷ 7 = $6,420
$44,940 ÷ 7 = $6,420
$ 3,210
9,630
16,050
*$48,940 - $4,000 = $44,940
MACHINE 2
2007
2008
$84,000 x 20%* x 1/2 = $8,400
(84,000 - $8,400) x 20% = $15,120
$ 8,400
23,520
*1/10 years = 10% x 2 = 20%
(c)
It really doesn’t matter which policy Tarcher chooses in
terms of recording amortization in the year of acquisition,
as long as it follows the policy consistently. The same total
amortization will be recorded whether amortization is
recorded monthly, or semi-annually. Amortization is an
estimate only, in any case.
(d) The choice of the method to prorate amortization in the
period of acquisition will not affect amortization expense if
the units-of-activity method is used. Under this method,
amortization is a function of the units produced not the
time the machine is owned.
Solutions Manual
9-41
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-3A
(a)
Cost:
Cash price
Delivery costs
Installation and testing
Total cost
$180,000
1,000
3,200
$184,200
The one-year insurance policy is not included as it is an
operating expenditure, benefiting only the current period.
(b)
1.
STRAIGHT-LINE AMORTIZATION
Calculation
Amortizable
Amort.
Year
Cost
X
Rate =
2006
2007
2008
2009
2010
2011
$172,700*
172,700
172,700
172,700
172,700
172,700
20%** x 8/12
20%
20%
20%
20%
20% x 4/12
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$184,200
$23,027 $ 23,027
161,173
34,540
57,567
126,633
34,540
92,107
92,093
34,540
126,647
57,553
34,540
161,187
23,013
11,513
172,700
11,500
* Amortizable cost = $184,200 - $11,500 = $172,700
** 1 ÷ 5 years = 20%
Solutions Manual
9-42
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-3A (Continued)
(b) (Continued)
2.
DOUBLE DECLINING-BALANCE AMORTIZATION
Year
Calculation
NBV Beg.
Amort.
of Year
X
Rate =
2006
2007
2008
2009
2010
2011
$184,200
135,080
81,048
48,269
29,177
17,506
40%* x 8/12
40%
40%
40%
40%
40%
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$184,200
$49,120
$49,120
135,080
54,032
103,152
81,048
32,419
135,571
48,629
19,452
155,023
29,177
11,671
166,694
17,506
6,006** 172,700
11,500
* 1 ÷ 5 years = 20% x 2 = 40%
**Use the amount that makes net book value equal to residual
value
3.
UNITS-OF-ACTIVITY AMORTIZATION
Year
2006
2007
2008
2009
2010
2011
Calculation
Units of
Amort.
Activity X Cost/Unit* =
8,500
12,000
11,500
10,500
9,500
3,000
$3.14*
3.14
3.14
3.14
3.14
3.14
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$184,200
$26,690 $ 26,690
157,510
37,680
64,370
119,830
36,110
100,480
83,720
32,970
133,450
50,750
29,830
163,280
20,920
9,420
172,700
11,500
*Amortizable cost per unit:
($184,200 - $11,500) ÷ 55,000 units = $3.14
Solutions Manual
9-43
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-3A (Continued)
(c)
Double declining-balance amortization provides the
highest amount of amortization expense for 2006, thus
resulting in the lowest net income that year. Over the life
of the asset, all three methods result in the same total
amortization expense (equal to the amortizable cost).
(d) All three methods will result in the same cash flow in
2006 and over the life of the asset. Recording
amortization expense does not affect cash flow. There is
no Cash account involved in the entry to record
amortization
(Dr.
Amortization
Expense;
Cr.
Accumulated Amortization). It is only an allocation of the
capital cost to expense over an asset’s useful life.
(e)
Factors that should influence management’s choice of
the amortization method to use include the revenue
pattern of a specific asset, the productivity of the asset,
as well as the usage of the asset on a year over year
basis. If an asset generates revenue consistently over
time, then the straight-line method is most appropriate.
If an asset is more productive in its earlier years then
the declining-balance method is most appropriate. If
usage of an asset can be easily measured and usage is
very different year over year then the units-of-activity
method is the most appropriate.
Solutions Manual
9-44
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-4A
Feb. 12 Building ...................................... 120,000
Cash.......................................
Mar.
6 Maintenance Expense ...............
Cash......................................
120,000
7,500
7,500
Apr. 10 Furniture and Fixtures .............. 25,000
Cash.......................................
25,000
May 17 Machinery .................................. 35,000
Cash.......................................
8,000
June 28 Maintenance Expense ...............
Cash.......................................
5,000
5,000
July 20 Repairs Expense ....................... 10,000
Cash.......................................
Aug.
5 Training Expense ......................
Cash.......................................
1,600
1,600
Sep. 18 Machinery .................................. 80,000
Cash.......................................
Nov.
6 Prepaid Insurance .....................
Cash.......................................
10,000
80,000
4,600
Dec. 31 Loss on Impairment .................. 70,000
Accumulated Amortization—
Equipment .............................
[($400,000 - $150,000) - $180,000]
4,600
70,000
Dec. 31 No journal entry required. Once a permanent
impairment has been recorded, the value of an
asset is not adjusted for any recovery in value.
Solutions Manual
9-45
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-5A
(a)
Calculation
Amortizable
Amort.
Year
Cost
X
Rate =
2004
2005
2006
2007
$620,000*
620,000
620,000
620,000
12.5%
12.5%
12.5%
12.5%
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$650,000
$77,500 $ 77,500
572,500
77,500
155,000
495,000
77,500
232,500
417,500
77,500
310,000
340,000
* Amortizable cost = $650,000 - $30,000 = $620,000
** 1 ÷ 8 years = 12.5%
(b) Dec. 31 Loss on Impairment
220,000
Accumulated Amortization—
Equipment ............................
[($650,000 - $310,000) - $120,000]
220,000
(c)
Calculation
Amortizable
Amort.
Year
Cost
X
Rate =
2008
2009
$90,0002
90,000
50%3
50%
Amort.
Expense
$45,000
45,000
End of Year
Accum. Net Book
Amort.
Value
$530,000¹ $120,000
575,000
75,000
620,000
30,000
¹Accumulated Amortization = $310,000 end of year before Loss
on impairment + $220,000 Loss on Impairment
2
Amortizable cost = $120,000 - $30,000 = $90,000
3
1 ÷ 2 years remaining = 50%
(d) Accumulated amortization at the end of this equipment’s
useful life will be $620,000. Net book value at the end of this
equipment’s useful life will be the amount of residual value
which is $30,000.
Solutions Manual
9-46
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-6A
(a)
Calculation
Amortizable
Amort.
Year
Cost
X
Rate =
Amort.
Expense
2004
2005
2006
2007
$20,000
40,000
40,000
40,000
$200,000*
200,000
200,000
200,000
20%** x 6/12
20%
20%
20%
End of Year
Accum. Net Book
Amort.
Value
$220,000
20,000
200,000
60,000
160,000
100,000
120,000
140,000
80,000
* Amortizable cost = $220,000 - $20,000 = $200,000
** 1 ÷ 5 years = 20%
(b) Jan.
(c)
9 Equipment.................................. 33,000
Cash.......................................
Nov. 18 Maintenance Expense ...............
Cash......................................
1,500
Dec. 15 Repair Expense .........................
Cash.......................................
2,400
33,000
1,500
Net book value, December 31, 2007 ......................
Add: Addition ...........................................................
Less: Revised residual value .................................
Revised amortizable cost .......................................
Remaining useful life (9 - 3½ years).......................
Revised annual amortization expense ..................
2,400
$80,000
33,000
113,000
25,000
88,000
5½ years
$16,000
Solutions Manual
9-47
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-6A (Continued)
(d)
Net book value before overhaul: Dec. 31, 2007
Add: Cost of overhaul
Net book value after overhaul
Less: Annual amortization after overhaul:
2008
$16,000
2009
16,000
2010
16,000
2011
16,000
2012
16,000
2013 ($16,000 x 6/12)
8,000
Net book value at end of useful life: June 30, 2013
Accumulated amortization:
Before overhaul: Dec. 31, 2007
Amortization from Jan 1, 2008 to
June 30, 2013 (see above)
At end of useful life: June 30, 2013
Check:
Original cost of asset
Cost of overhaul
Less: accumulated amortization June 30, 2013
Net book value June 30, 2013
$80,000
33,000
113,000
88,000
$25,000
$140,000
88,000
$228,000
$220,000
33,000
253,000
228,000
$ 25,000
Note: Net book value June 30, 2013 = revised estimated residual
value of $25,000.
Solutions Manual
9-48
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-7A
(a)
1.
STRAIGHT-LINE AMORTIZATION
Calculation
End of Year
Amortizable
Amort.
Year
Cost
X Rate (1/3) =
Annual
Amort.
Expense
Accum.
Amort.
2007
2008
2009
$48,000
48,000
48,000
$48,000
96,000
144,000
$144,000*
144,000
144,000
1/3
1/3
1/3
Net
Book
Value
$170,000
122,000
74,000
26,000
*$170,000 - $26,000 = $144,000
2.
UNITS-OF-ACTIVITY AMORTIZATION
Calculation
Year
2007
2008
2009
Units of
Amort.
Activity X Cost/Unit1 =
155,000
135,000
110,000
$0.36
0.36
0.36
End of Year
Annual
Amort.
Expense
Accum.
Amort.
$55,800
48,600
39,600
$55,800
104,400
144,000
Net
Book
Value
$170,000
114,200
65,600
26,000
1
Amortizable cost per unit:
($170,000 - $26,000) ÷ 400,000 km = $0.36 per kilometre
Solutions Manual
9-49
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-7A (Continued)
(b) 1.
(a) Straight
-Line
Cost ............................................... $170,000
Accumulated amortization. ..........
96,000
Book value ....................................
74,000
Cash proceeds .............................
60,000
Loss on disposal .......................... $ 14,000
(b) Unitsof-Activity
$170,000
104,400
65,600
60,000
$ 5,600
2.
Amortization expense ..................
Add: Loss on disposal ................
Net expense ..................................
$ 96,000
14,000
$110,000
$104,400
5,600
$110,000
In total the effect on net earnings is the same under both
methods. This is because the method of amortization
selected only affects the timing of the expense recognition.
In total over the life of the asset the expense recognized is
the same.
Solutions Manual
9-50
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-8A
(a)
2006
Mar. 11 Office Equipment ...................... 85,000
Accounts Payable .................
(b) Dec. 31 Amortization Expense ............... 17,500
Accumulated Amortization
—Office Equipment ..............
[($85,000 - $1,000) ÷ 4 years] x 10/12 months
2007
Dec. 31 Amortization Expense ............... 21,000
Accumulated Amortization
—Office Equipment ..............
($85,000 - $1,000) ÷ 4 years
2008
Nov. 22 Amortization Expense ............... 19,250
Accumulated Amortization
—Office Equipment ..............
[($85,000 - $1,000) ÷ 4 years] x 11/12
85,000
17,500
21,000
19,250
(c)
(1)
(2)
Nov. 22 Accumulated Amortization
—Office Equipment¹.................. 57,750
Loss on Disposal ...................... 27,250
Office Equipment ..................
¹ $17,500 + $21,000 + $19,250 = $57,750
Nov. 22
Cash ........................................... 35,000
Accumulated Amortization—
Office Equipment ...................... 57,750
Gain on Disposal ..................
Office Equipment ..................
85,000
7,750
85,000
Solutions Manual
9-51
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-8A (Continued)
(c) (Continued)
(3)
(4)
Nov. 22 Cash ........................................... 20,000
Accumulated Amortization—
Office Equipment ...................... 57,750
Loss on Disposal ...................... 7,250
Office Equipment ..................
85,000
Nov. 22 Office Equipment
($25,000 + $78,000) .................... 103,000
Accumulated Amortization
—Office Equipment ................... 57,750
Loss on Disposal
($85,000 - $57,750) - $25,000..... 2,250
Cash ($113,000 - $35,000) ....
Office Equipment ..................
78,000
85,000
Solutions Manual
9-52
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-9A
(a)
2004
Oct. 6
Land .................................................... 280,000
Building ............................................... 225,000
Machinery ........................................... 45,000
Cash................................................
Mortgage Payable ($550,000 - $100,000)
100,000
450,000
Amortization Expense ........................ 10,125
Accumulated Amortization—Building
Accumulated Amortization—Machinery
5,625
4,500
2005
Sep. 30
Building $225,000 ÷ 40 = $5,625
Machinery $45,000 ÷ 10 = $4,500
2006
Sep. 30
Amortization Expense ........................ 10,125
Accumulated Amortization—Building
Accumulated Amortization—Machinery
5,625
4,500
Amortization Expense ........................ 17,625
Accumulated Amortization—Building
Accumulated Amortization—Machinery
5,625
12,000
Machinery
Net book value, ($45,000 - $4,500 - $4,500) ...................
Remaining useful life (5 - 2) ............................................
Revised annual amortization expense ...........................
$36,000
÷ 3 years
$12,000
2007
Sep. 30
Solutions Manual
9-53
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-9A (Continued)
(a) (Continued)
2008
June 28 Amortization Expense ........................ 9,000
Accumulated Amortization—Machinery
($12,000 x 9/12 months = $9,000)
28
Machinery* .......................................... 60,000
Accumulated Amortization
—Machinery** ..................................... 30,000
Gain on Disposal*** .......................
Machinery .......................................
Cash ($65,000 - $23,000) ...............
9,000
3,000
45,000
42,000
* $42,000 + $18,000 = $60,000
** $4,500 + $4,500 + $12,000 + $9,000 = $30,000
*** $18,000 - ($45,000 - $30,000) = $3,000
Sep. 30
Amortization Expense ........................ 8,625
Accumulated Amortization—Building*
Accumulated Amortization—Machinery**
5,625
3,000
* $225,000 ÷ 40 = $5,625
** ($60,000 ÷ 5) x 3/12 months = $3,000
Solutions Manual
9-54
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-9A (Continued)
(b)
Menda Investments.
Balance Sheet (Partial)
September 30, 2008
Property, plant, and equipment
Land ............................................................................. $280,000
Buildings ..................................................... $225,000
Less: Accumulated amortization* .............
22,500
202,500
Machinery .................................................... $60,000
Less: Accumulated amortization ...............
3,000
57,000
Total property, plant, and equipment ................... $539,500
* $5,625 x 4 years = $22,500
(c)
The income statement for September 30, 2008 will include:
Amortization expense ($5,625 + $9,000 + $3,000): $17,625
Gain on disposal:
$3,000
Solutions Manual
9-55
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-10A
1.
2.
3.
4.
Research Expense ..................................... 60,000
Patent .....................................................
60,000
Patent .......................................................... 21,000
Legal Fees Expense ..............................
21,000
Patent .......................................................... 38,000
Legal Fees Expense ..............................
38,000
Patent .......................................................... 50,000
Royalty Revenue ....................................
50,000
5.
Amortization Expense ................................ 16,550
Accumulated Amortization—Patent .....
16,550
{[($35,000 + $21,000 + $38,000) ÷ 5 years] - $2,250}
6.
Loss on Impairment ...................................
Accumulated Amortization—Patent .....
[($94,000 - $18,800) - $70,000]
5,200
5,200
Solutions Manual
9-56
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-11A
(a)
Jan.
Jan. June
July
2 Trademark ................................ 0.27,000
Cash.....................................
27,000
Research Expense .................. 210,000
Cash.....................................
210,000
1 Patent (Development Costs)...
Cash.....................................
50,000
Sept. 1 Advertising Expense ...............
Cash.....................................
60,000
Oct.
50,000
60,000
1 Copyright #2 ............................ 180,000
Cash.....................................
180,000
Dec. 31 Impairment Loss ..................... 40,000
Goodwill ($125,000 - $85,000)
40,000
(b) Dec. 31 Amortization Expense .............
1,250
Accumulated Amortization—
Patent .................................
[($50,000 ÷ 20) x 6/12] = $1,250]
1,250
31 Amortization Expense ............. 12,600
Accumulated Amortization—
Copyright .............................
12,600
[($36,000 x 1/10) + ($180,000 x 1/5 x 3/12)]
Note: Amortization is not recorded on trademark because
it has an expected indefinite useful life.
Solutions Manual
9-57
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-11A (Continued)
(c)
GHANI CORPORATION
Balance Sheet (Partial)
December 31, 2008
Assets
Intangible assets
Patents .................................................
$ 50,000
Less: Accumulated amortization .......
1,250
$ 48,750
(1)
Copyrights ........................................
$216,000
Less: Accumulated amortization .......
37,800
178,200
(2)
Trademark ................................................................
81,000
Goodwill ......................................................................
85,000
Total intangible assets .............................................. $392,950
(1)
(2)
Copyright: Cost $36,000 + $180,000 = $216,000
Copyright: Amortization $25,200 + $12,600 = $37,800
Trademark: $54,000 + $27,000 = $81,000
Solutions Manual
9-58
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-12A
(a)
2007
June 7 Timber Land........................ 50,000,000
Cash................................
10,000,000
Mortgage Payable ..........
40,000,000
26 Weighing Equipment .............
Cash...................................
199,900
199,900
Dec. 31 Inventory ................................ 5,280,000
Accumulated Amortization
—Timber Land ..................
5,280,000
($50,000,000 - $2,000,000) ÷ 1,000,000
= $48/t x 110,000 t = $5,280,000
31 Cost of Goods Sold ............... 4,800,000
Inventory ($48/t x 100,000 t)
4,800,000
31 Amortization Expense ...........
Accumulated Amortization
—Weighing Equipment.....
($199,900 - $20,000) ÷ 7 =
$25,700 x 6/12 mos. = $12,850
12,850
12,850
31 Interest Expense
($40,000,000 x 7% x 7/12) ...... 1,633,333
Cash...................................
1,633,333
31 Mortgage Payable.................. 8,000,000
Cash...................................
8,000,000
Solutions Manual
9-59
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-12A (Continued)
(a) (Continued)
2008
Dec. 31 Inventory
($48/t x 230,000 t) .................. 11,040,000
Accumulated Amortization
—Timber Land ..................
11,040,000
31 Cost of Goods Sold
($48/t x 230,000 t) .................. 11,040,000
Inventory ...........................
11,040,000
31 Amortization Expense ...........
Accumulated Amortization
—Weighing Equipment.....
25,700
25,700
31 Interest Expense
($32,000,000 x 7%) ................. 2,240,000
Cash...................................
2,240,000
31 Mortgage Payable.................. 8,000,000
Cash...................................
8,000,000
Solutions Manual
9-60
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-12A (Continued)
(b)
CYPRESS TIMBER COMPANY
(Partial) Balance Sheet
December 31, 2008
Current Assets
Inventory1 ............................................
$ 480,000
Property, plant, and equipment
Timber tract ......................................... $50,000,000
Less: Accumulated amortization2...... 16,320,000 $33,680,000
Weighing equipment ..........................
199,900
3
Less: Accumulated amortization ......
38,550
161,350
Total property, plant, and equipment ............... $33,841,350
1
10,000 tonnes x $48/t
$5,280,000 + $11,040,000 = $16,320,000
3
$12,850 (2007) + $25,700 (2008) = $38,550
2
As well, the Income Statement for the year ended December 31,
2008, will include cost of goods sold of $11,040,000,
amortization expense of $25,700 and interest expense of
$2,240,000.
Solutions Manual
9-61
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-13A
(a)
St. Amand Company
St. Helene Company
Asset
$4,375,000
$2,775,000
turnover [($3,780,000 + $4,290,000) ÷ 2] [($2,540,000 + $2,175,000) ÷ 2]
= 1.08 to 1
Return
on
assets
= 1.18 to 1
$350,000
$300,000
[($3,780,000 + $4,290,000) ÷ 2] [($2,540,000 + $2,175,000) ÷ 2]
= 8.67%
= 12.73%
(b) St. Helene Company is more efficient in using its assets to
generate sales–its assets turnover of 1.18 times is higher
than 1.08 for St. Amand Company. It is also much more
efficient in using assets to produce income–with a return
on assets of 12.73% compared to 8.67% for St. Amand
Company.
Solutions Manual
9-62
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-1B
(a)
Jan. 22 Land ........................................... 220,000
Cash.......................................
Note Payable .........................
24 Land ...........................................
Cash......................................
55,000
165,000
4,500
4,500
31 Land ........................................... 25,000
Cash.......................................
Feb. 13 Land ...........................................
Cash.......................................
8,000
28 Cash ...........................................
Land .......................................
7,500
25,000
8,000
7,500
Mar. 14 Building ...................................... 34,000
Cash.......................................
34,000
31 Building ...................................... 15,000
Cash.......................................
15,000
Apr. 22 Building ...................................... 17,000
Cash.......................................
17,000
June 15 Building ...................................... 300,000
Cash.......................................
Note Payable .........................
75,000
225,000
Sept. 14 Building ...................................... 300,000
Cash.......................................
Note Payable .........................
100,000
200,000
30 Building ......................................
Cash.......................................
6,700
6,700
Solutions Manual
9-63
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-1B (Continued)
(a) (Continued)
Oct. 12 Land Improvements .................. 42,000
Cash.......................................
20 Land Improvements ..................
Cash.......................................
8,000
Dec. 31 Interest Expense .......................
Cash.......................................
7,800
22,000
8,000
7,800
(b)
Date
2008
Jan. 22
24
31
Feb. 13
28
Date
2008
Mar. 14
31
Apr. 22
June 15
Sept.14
30
Explanation
Land
Ref.
Debit
Credit Balance
220,000
4,500
25,000
8,000
220,000
224,500
249,500
257,500
250,000
7,500
Explanation
Building
Ref.
Debit
Credit Balance
34,000
15,000
17,000
300,000
300,000
6,700
34,000
49,000
66,000
366,000
666,000
672,700
Solutions Manual
9-64
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-1B (Continued)
(b) (Continued)
Date
2008
Oct. 12
20
Land Improvements
Explanation
Ref. Debit
Credit Balance
42,000
8,000
42,000
50,000
The cost of land that will appear on Kadlec’s December 31, 2008
balance sheet will be $250,000. The cost of the building that will
appear on Kadlec’s December 31, 2008 balance sheet will be
$672,700. The cost of land improvements that will appear on
Kadlec’s December 31, 2008 balance sheet will be $50,000.
Solutions Manual
9-65
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-2B
(a)
Year
Calculation
Accumulated
Amortization
Dec. 31
MACHINE 1
2005
2006
2007
2008
$92,000* x 10%** x 9/12 = $6,900
$92,000 x 10% = $9,200
$92,000 x 10% = $9,200
$92,000 x 10% = $9,200
$ 6,900
16,100
25,300
34,500
*$96,000 - $4,000 = $92,000
**1/10 years = 10%
MACHINE 2
2007
2008
$60,000 x 12.5%* x 3/12 = $1,875
$58,125 x 12.5% = $7,266
$1,875
9,141
*1/8 years = 12.5%
(b)
Year
2005
2006
2007
2008
Calculation
MACHINE 1
$92,000* x 10%** x 6/12 = $4,600
$92,000 x 10% = $9,200
$92,000 x 10% = $9,200
$92,000 x 10% = $9,200
Accumulated
Amortization
Dec. 31
$ 4,600
13,800
23,000
32,200
*$96,000 - $4,000 = $92,000
**1/10 years = 10%
Solutions Manual
9-66
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-2B (Continued)
(b) (Continued)
MACHINE 2
2007
2008
$60,000 x 12.5%* x 6/12 = $3,750
$56,250 x 12.5% = $7,031
$ 3,750
10,781
*1/8 years = 12.5%
(c)
Flakeboard should not consider recording amortization to
the nearest day. The amount is an estimate only. The
additional cost of recording it to the nearest day is not
warranted. It implies an accuracy that does not exist.
(d) It really doesn’t matter which policy Flakeboard chooses in
terms of recording amortization in the year of acquisition,
as long as it follows the policy consistently. The same total
amortization will be recorded whether amortization is
recorded monthly, or semi-annually. Amortization is an
estimate only, in any case.
Solutions Manual
9-67
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-3B
(a)
Invoice price
$102,000
Delivery cost
5,200
Installation and testing
4,300
Cost of the machine
$111,500
The $975 insurance policy is an annual operating
expenditure and not included in the cost of the asst.
(b) 1. STRAIGHT-LINE AMORTIZATION
Calculation
Amortizable
Amort.
Year
Cost
X
Rate =
2006
2007
2008
2009
2010
*
**
***
$105,000*
105,000
105,000
105,000
105,000
Amort.
Expense
25%* x 3/12*** $ 6,563
25%
26,250
25%
26,250
25%
26,250
25% x 9/12
19,687
End of Year
Accum. Net Book
Amort.
Value
$111,500
$ 6,563
104,937
32,813
78,687
59,063
52,437
85,313
26,187
105,000
6,500
$111,500 - $6,500 = $105,000
1/4 years = 25%
Machine was ready for use on October 1, 2006
Solutions Manual
9-68
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-3B (Continued)
(b) (Continued)
2.
DOUBLE DECLINING-BALANCE AMORTIZATION
Calculation
NBV (Beg.
Amort.
Year of Year
X
Rate =
2006
2007
2008
2009
2010
$111,500
97,562
48,781
24,390
12,195
50%* x 3/12
50%
50%
50%
50%
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$111,500
$13,938
$13,938
97,562
48,781
62,719
48,781
24,391
87,110
24,390
12,195
99,305
12,195
5,695*** 105,000
6,500
* 1/4 years = 25% x 2 = 50%
** Limited to the amount that brings residual value to $6,500
3.
Year
2006
2007
2008
2009
2010
UNITS-OF-ACTIVITY
Calculation
Units of
Amort.
Activity X Cost/Unit* =
2,000
9,150
7,650
6,700
4,500
$3.50*
3.50
3.50
3.50
3.50
Amort.
Expense
$ 7,000
32,025
26,775
23,450
15,750
End of Year
Accum. Net Book
Amort.
Value
$111,500
$ 7,000
104,500
39,025
72,475
65,800
45,700
89,250
22,250
105,000
6,500
* Amortizable cost per unit is $3.50 per unit
[($111,500 – $6,500)  30,000 = $3.50]
Solutions Manual
9-69
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-3B (Continued)
(c)
Straight-line amortization provides the lowest amount of
amortization expense for 2006 which results in the highest
amount of net income. Over the life of the asset, all three
methods result in the same total amortization expense
(equal to the amortizable cost) and therefore the same
amount of net income.
(d) All three methods will result in the same cash flow in 2006
and over the life of the asset. Recording amortization
expense does not affect cash flow. There is no Cash
account involved in the entry to record amortization (Dr.
Amortization Expense; Cr. Accumulated Amortization). It is
only an allocation of the capital cost to expense over an
asset’s useful life.
(e)
Factors that should influence management’s choice of the
amortization method to use include the revenue pattern of
a specific asset, the productivity of the asset, as well as
the usage of the asset on a year over year basis. If an asset
generates revenue consistently over time, then the
straight-line method is most appropriate. If an asset is
more productive in its earlier years then the decliningbalance method is most appropriate. If usage of an asset
can be easily measured and usage is very different year
over year then the units-of-activity method is the most
appropriate.
Solutions Manual
9-70
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-4B
Feb.
2 Maintenance Expense ...............
Cash.......................................
2,000
Mar. 16 Maintenance Expense ...............
Cash......................................
4,500
2,000
4,500
Apr. 14 Building ...................................... 57,000
Cash.......................................
May
7 Land Improvements .................. 4,600
Cash.......................................
4,600
Note: Assuming the flowers and shrubs will last
for longer than one year.
June 16 Repairs Expense .......................
Cash.......................................
5,900
5,900
July 18 Vehicles ..................................... 15,000
Cash.......................................
Aug.
8 Training Expense ......................
Cash.......................................
Oct. 26 Repairs Expense .......................
Cash.......................................
15,000
5,500
5,500
Sep. 20 Machinery .................................. 20,000
Cash.......................................
1.
57,000
20,000
1,600
1,600
Dec. 31 No journal entry required. Once a permanent
impairment has been recorded, the value of an asset
is not adjusted for any recovery in value.
Solutions Manual
9-71
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-4B (Continued)
2.
Dec. 31 Loss on Impairment .................. 40,000
Accumulated Amortization—
Equipment ............................
[($300,000 - $125,000) - $135,000]
40,000
Solutions Manual
9-72
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-5B
(a)
Calculation
Amortizable
Amort.
Year
Cost
X
Rate** =
2004
2005
2006
2007
$550,000*
550,000
550,000
550,000
10%
10%
10%
10%
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$600,000
$55,000 $ 55,000
545,000
55,000
110,000
490,000
55,000
165,000
435,000
55,000
220,000
380,000
* Amortizable cost = $600,000 - $50,000 = $550,000
** 1 ÷ 10 years = 10%
(b)
Dec. 31
Loss on Impairment
180,000
Accumulated Amortization—
Equipment ............................
[($600,000 - $220,000) - $200,000]
180,000
(c)
Calculation
Amortizable
Amort.
Year
Cost
X
Rate =
2008
2009
$150,0002
150,000
50%3
50%
End of Year
Amort.
Accum. Net Book
Expense
Amort.
Value
$400,000¹ $200,000
$75,000 475,000
125,000
75,000
550,000
50,000
¹Accumulated Amortization = $220,000 end of year before Loss
on impairment + $180,000 Loss on Impairment
2
Amortizable cost = $200,000 - $50,000 = $150,000
3
1 ÷ 2 years remaining = 50%
(d) Accumulated amortization at the end of this equipment’s
useful life will be $550,000. Net book value at the end of
this equipment’s useful life will be the amount of residual
value which is $50,000.
Solutions Manual
9-73
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-6B
(a)
Calculation
Amortizable
Amort.
Year
Cost
X
Rate =
Amort.
Expense
2003
2004
2005
2006
2007
$11,500
23,000
23,000
23,000
23,000
$115,000*
115,000
115,000
115,000
115,000
20% x 6/12
20%
20%
20%
20%
End of Year
Accum. Net Book
Amort.
Value
$125,000
11,500
113,500
34,500
90,500
57,500
67,500
80,500
44,500
103,500
21,500
* Amortizable cost = $125,000 - $10,000 = $115,000
** 1 ÷ 5 years = 20%
(b) Jan.
(c)
7 Equipment.................................. 15,000
Cash.......................................
July 27 Maintenance Expense ...............
Cash......................................
1,000
Sept. 19 Repair Expense .........................
Cash.......................................
2,500
15,000
1,000
Net book value, December 31, 2007 ......................
Add: Addition ...........................................................
Less: Revised residual value ................................
Revised amortizable cost .......................................
Remaining useful life (7 – 4½ years) ......................
Revised annual amortization expense ..................
2,500
$21,500
15,000
36,500
12,000
24,500
2½ years
$9,800
Solutions Manual
9-74
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-6B (Continued)
(d)
Calculation
Amortizable
Amort.
Year
Cost
X
Rate =
2008
2009
2010
$24,500*
24,500
24,500
40%**
40%
40% x 6/12
Amort.
Expense
$ 9,800
9,800
4,900
End of Year
Accum. Net Book
Amort.
Value
$103,500 $36,500¹
113,300
26,700
123,100
16,900
128,000
12,000
*Amortizable cost (revised) = $36,500 - $12,000 = $24,500
**1 ÷ 2.5 years remaining = 40%
¹Net book value before overhaul + cost of overhaul = $21,500 +
$15,000
Conclusion: Total accumulated amortization at the end of the
asset’s useful life will be $128,000.
Check:
Original cost of asset
Cost of overhaul
Less: accumulated amortization June 30, 2010
Net book value June 30, 2010
$125,000
15,000
240,000
128,000
$ 12,000
Note: Net book value June 30, 2010 = revised estimated residual
value of $12,000.
Solutions Manual
9-75
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-7B
(a)
(1)
STRAIGHT-LINE AMORTIZATION
Calculation
Amortizable
Amort.
Amort.
Year
Cost
X
Rate = Expense
2006
2007
2008
2009
$56,000*
56,000
56,000
56,000
25%**
25%
25%
25%
$14,000
14,000
14,000
14,000
End of Year
Accum. Net Book
Amort.
Value
$61,000
$14,000
47,000
28,000
33,000
42,000
19,000
56,000
5,000
* $61,000 - $5,000 = $56,000
** ¼ years = 25%
(2)
DOUBLE DECLINING-BALANCE AMORTIZATION
Calculation
End of Year
NBV (Beg.
Amort.
Amort.
Accum. Net Book
Year of Year
X
Rate = Expense
Amort.
Value
$61,000
2006
$61,000
50%*
$30,500
$30,500
30,500
2007
30,500
50%
15,250
45,750
15,250
2008
15,250
50%
7,625
53,375
7,625
2009
7,625
50%
**2,625
56,000
5,000
* ¼ years = 25% x 2
** Amount that makes Net Book Value equal to residual
Solutions Manual
9-76
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-7B (Continued)
(b) 1.
(a)
Straight-Line
Cost .................................................
Accumulated amortization. ............
Net book value ................................
Cash proceeds ...............................
(Gain) loss on disposal ..................
(b)
DecliningBalance
$61,000
42,000
19,000
10,000
$ 9,000
$61,000
53,375
7,625
10,000
$(2,375)
$42,000
9,000
$51,000
$53,375
(2,375)
$51,000
2.
Amortization expense ....................
(Gain) Loss on disposal .................
Net expense ....................................
In total the effect on net income is the same under
both methods. This is because the method of
amortization selected only affects the timing of the
expense recognition. In total over the life of the asset,
the expense recognized is the same.
Solutions Manual
9-77
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-8B
(a)
2006
Feb.
4 Delivery Equipment ................... 65,000
Accounts Payable .................
65,000
(b) Dec. 31 Amortization Expense ............... 11,000
Accumulated Amortization
—Delivery Equipment ...........
11,000
($65,000 - $5,000) x 1/5 years x 11/12 months = $11,000
2007
Dec. 31 Amortization Expense ............... 12,000
Accumulated Amortization
—Delivery Equipment ...........
($65,000 - $5,000) x 1/5 years = $12,000
12,000
2008
Oct. 25 Amortization Expense ............... 10,000
Accumulated Amortization
—Delivery Equipment ...........
10,000
($65,000 - $5,000) x 1/5 years x 10/12 months = $10,000
(c)
1.
Oct. 25
Accumulated Amortization
—Delivery Equipment ............... 33,000
Loss on Disposal ...................... 32,000
Delivery Equipment ..............
65,000
Accumulated Amortization:
($65,000 - $5,000) x 33/60 months = $33,000
Or add annual amortization expense in above journal
entries: ($11,000 + $12,000 + $10,000 = $33,000)
Solutions Manual
9-78
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-8B (Continued)
(c) (Continued)
2.
3.
4.
Oct. 25
Oct. 25
Oct. 25
Cash ........................................... 30,000
Loss on Disposal ...................... 2,000
Accumulated Amortization
—Delivery Equipment ............... 33,000
Delivery Equipment ..............
65,000
Cash ........................................... 40,000
Accumulated Amortization
—Delivery Equipment ............... 33,000
Gain on Disposal ..................
Delivery Equipment ..............
8,000
65,000
Delivery Equipment
($28,000 + $55,000) .................... 83,000
Accumulated Amortization
—Delivery Equipment ............... 33,000
Loss on Disposal
($28,000 - $32,000)..................... 4,000
Cash ($87,000 - $32,000) ......
Delivery Equipment ..............
55,000
65,000
Solutions Manual
9-79
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-9B
(a)
2004
July
3
2005
June 30
Land ...............................................
Building .........................................
Machinery ......................................
Cash ..........................................
Mortgage Payable
($750,000 - $100,000) ................
410,000
300,000
40,000
Amortization Expense ..................
12,500
Accumulated Amortization—Building
Accumulated Amortization—Machinery
100,000
650,000
7,500
5,000
Building $300,000 ÷ 40 = $7,500
Machinery $40,000 ÷ 8 = $5,000
2006
June 30
Amortization Expense ..................
12,500
Accumulated Amortization—Building
Accumulated Amortization—Machinery
7,500
5,000
Solutions Manual
9-80
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-9B (Continued)
(a) (Continued)
2007
June 30
Amortization Expense ..................
17,500
Accumulated Amortization—Building
Accumulated Amortization—Machinery
7,500
10,000
Machinery
Net book value ($40,000 - $10,000) ................................ $ 30,000
Remaining useful life (5 - 2) ............................................ ÷ 3 years
Revised annual amortization expense ........................... $ 10,000
Dec. 28
28
Amortization Expense ..................
5,000
Accumulated Amortization—Machinery
($10,000 x 6/12 months)
Machinery* .....................................
Accumulated Amortization
—Machinery** ................................
Gain on Disposal*** ..................
Machinery..................................
Cash ($65,000 - $25,000) ..........
5,000
62,000
25,000
7,000
40,000
40,000
* $40,000 + $22,000 = $62,000
** $5,000 + $5,000 + $10,000 + $5,000 = $25,000
*** $22,000 - ($40,000 - $25,000) = $7,000
2008
June 30
Amortization Expense ..................
13,700
Accumulated Amortization—Building
Accumulated Amortization—Machinery
7,500
6,200
Machinery ($62,000 ÷ 5) x 6/12 months = $6,200
Solutions Manual
9-81
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-9B (Continued)
(b)
Ledesma Investments.
Balance Sheet (Partial)
June 30, 2008
Property, plant, and equipment
Land ............................................................................. $410,000
Buildings .................................................... $300,000
Less: Accumulated amortization* ............
30,000 270,000
Machinery ................................................... $62,000
Less: Accumulated amortization ..............
6,200
55,800
Total property, plant, and equipment ................... $735,800
*$7,500 + $7,500 + $7,500 + $7,500 = $30,000
(c)
The income statement for June 30, 2008 will include:
Amortization expense ($5,000 + $7,500 + $6,200)
Gain on disposal
$18,700
7,000
Solutions Manual
9-82
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-10B
1.
Research Expense ($120,000 x 55%) ........ 66,000
Patents ...................................................
Accumulated Amortization—Patents ........
Amortization Expense ...........................
$66,000 ÷ 15 years = $4,400
2.
66,000
4,400
4,400
Trademark ................................................... 25,000
Loss on Impairment–Trademark
($125,000 - $100,000) ............................
25,000
Loss on impairment should not be recorded until there is a
permanent impairment in value of the trademark. In this
case, Riley is attempting to defend its right and their
lawyers indicate they expect Riley to win which indicates
that there is not a permanent impairment in value of the
trademark.
3.
Accumulated Amortization–
Goodwill [($250,000 ÷ 40) x 6/12] ..............
Amortization expense............................
3,125
3,125
Note: Goodwill is not amortized.
4.
5.
Charitable Donations Expense ..................
Goodwill .................................................
6,000
Gain on License Market Value................... 30,000
License ...................................................
6,000
30,000
Solutions Manual
9-83
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-11B
(a)
Jan.
2 Patent #1 .................................... 22,400
Cash.......................................
22,400
June 30 Research Expense .................... 220,000
Cash.......................................
220,000
30 Patent #2 (Development Costs) 60,000
Cash.......................................
60,000
Sept. 1 Advertising Expense ................. 35,000
Cash.......................................
35,000
Oct.
1 Copyright #2 .............................. 80,500
Cash.......................................
80,500
Dec. 31 Impairment Loss ....................... 60,000
Goodwill ($210,000 - $150,000)
60,000
(b) Dec. 31 Amortization Expense ............... 9,800
Accumulated Amortization—Patent #1
[($70,000 x 1/10) + ($22,400 x 1/8)]
31 Amortization Expense ............... 7,675
Accumulated Amortization—
Copyright #1 ..........................
Accumulated Amortization—
Copyright #2 ..........................
[($48,000 x 1/10) + ($80,500 x 1/7 x 3/12)]
31 Amortization Expense ............... 1,500
Accumulated Amortization—Patent #2
[($60,000 ÷ 20 years) x 6/12 = $1,500)
9,800
4,800
2,875
1,500
Solutions Manual
9-84
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-11B (Continued)
(c)
IP COMPANY
(Partial) Balance Sheet
December 31, 2008
Assets
Intangible assets
Patents(1) ...............................................
Less: Accumulated amortization* ......
Copyrights(2) .........................................
Less: Accumulated amortization** .....
Goodwill ...............................................
Total intangible assets ........................
(1)
*
(2)
**
$152,400
25,300
128,500
36,475
$127,100
92,025
150,000
$369,125
Cost: Patent #1 ($70,000 + $22,400) + Patent #2 $60,000 =
$152,400
Amortization: Patent #1 ($14,000 + $7,000 + $2,800) + Patent
#2 ($1,500) = $25,300
Cost: Copyright #1 ($48,000) + Copyright #2 ($80,500) =
$128,500
Amortization: Copyright #1 ($28,800 + $4,800) + Copyright
#2 ($2,875) = $36,475
Solutions Manual
9-85
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-12B
(a)
2007
Mar. 31 Mine ($2,600,000 + $260,000) . 2,860,000
Cash..................................
2,860,000
Apr. 6 No entry required
Dec. 31 Inventory .................................
570,000
Accumulated Amortization
—Mine...............................
570,000
($2,860,000 - $200,000) ÷ 560,000 t = $4.75/t x 120,000 t
= $570,000
31 Cost of Goods Sold ................
475,000
Inventory ($4.75/t x 100,000 t)
31 Amortization Expense ............
Accumulated Amortization
—Equipment ....................
475,000
60,000
60,000
($500,000 - $20,000) ÷ 8 years = $60,000. Note that
equipment is amortized for the full year, because it has
been in use for the full year (at another site earlier in the
year).
2008
Dec. 31 Inventory ($4.75/t x 110,000 t)522,500
Accumulated Amortization
—Mine...............................
31 Cost of Goods Sold
($4.75/t x 110,000 t) ..............
Inventory ..........................
522,500
522,500
522,500
Solutions Manual
9-86
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-12B (Continued)
(a)Continued
Dec.
31 Amortization Expense ..........
Accumulated Amortization
—Equipment ....................
60,000
60,000
(b)
YOUNT MINING COMPANY
(Partial) Balance Sheet
December 31, 2008
Current Assets
Inventory ..............................................
Property, plant, and equipment
Mine ...................................................... $2,860,000
Less: Accumulated amortization* ...... 1,092,500
Equipment ............................................
$500,000
**
Less: Accumulated amortization .....
375,000
$ 95,000
1,767,500
125,000
* $570,000 + $522,500 = $1,092,500
** $15,000 (2002) + $60,000 (2003) + $60,000 (2004) + $60,000
(2005) + $60,000 (2006) + $60,000 (2007) + $60,000 (2008) =
$375,000
As well, the Income Statement for the year ended December 31,
2008, will include cost of goods sold of $522,500 and
amortization expense of $60,000.
Solutions Manual
9-87
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
PROBLEM 9-13B
(a)
Andruski Company
Brar Company
Asset
$1,950,000
$2,300,000
turnover [($2,250,000 + $2,800,000) ÷ 2] [($2,465,000 + $3,295,000) ÷2]
= 0.77 to 1
Return
on
assets
= 0.8 to 1
$295,000
$310,000
[($2,250,000 + $2,800,000) ÷ 2] [($2,465,000 + $3,295,000) ÷2]
= 11.68%
= 10.76%
(b) Brar Company is a little more efficient in using its assets to
generate sales–its assets turnover of 0.8 times is higher
than 0.77 times for Andruski Company. Andruski is more
efficient in using assets to produce income–with a return
on assets of 11.68% compared to 10.76% for Brar
Company.
Solutions Manual
9-88
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
CONTINUING COOKIE CHRONICLE
(a)
Purchase price ........................................................
Painting ....................................................................
Shelving ...................................................................
Cost of van...............................................................
$34,500
2,500
1,500
$38,500
(b) Straight-line amortization
Amortizable
Year
Cost
X
2008
2009
2010
$32,000*
32,000
32,000
Amort.
Rate =
20% x 4/12
20%
20%
Amort.
Expense
$ 2,133
6,400
6,400
Accum. Net Book
Amort.
Value
$38,500
$ 2,133
36,367
8,533
29,967
14,933
23,567
* ($38,500 - $6,500 = $32,000)
Single declining-balance amortization
NBV (Beg.
Year of Year
X
2008
2009
2010
$38,500
35,933
28,746
Amort.
Rate =
20%* x 4/12
20%
20%
Amort.
Expense
$ 2,567
7,187
5,749
Accum. Net Book
Amort.
Value
$38,500
$ 2,567
35,933
9,754
28,746
15,503
22,997
Units-of-activity amortization
Year
Units of
Activity X
2008
2009
2010
15,000
45,000
50,000
Amort.
Cost/Unit =
$0.16*
0.16
0.16
Amort.
Expense
$ 2,400
7,200
8,000
Accum. Net Book
Amort.
Value
$38,500
$ 2,400
36,100
9,600
28,900
17,600
20,900
*$32,000 ÷ 200,000 = $0.16 per km
Solutions Manual
9-89
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
CONTINUING COOKIE CHRONICLE (Continued)
(c)
Impact on Cookie Creation's balance sheet and income
statement in 2008:
Single
DecliningUnits-ofStraight-Line
Balance
Activity
Cost of asset
$38,500
$38,500
$38,500
Accumulated amortization
2,133
2,567
2,400
Net book value
$36,367
$35,933
$36,100
Amortization expense
$2,133
$2,567
$2,400
The single-declining method of amortization will result in
the lowest amount of net income reported, the lowest
amount of owner's equity reported and the lowest net book
value of the asset reported.
The straight-line method of amortization will result in the
greatest amount of net income reported, the greatest
amount of owner's equity reported and the greatest net
book value of the asset reported.
(d) Over the van’s 5-year useful life the total amortization will
be $32,000 under each of the methods. The impact will
affect the timing of the amortization expense recognized
each year only.
(e)
The units-of-activity method may provide Natalie with a
more accurate assessment of usage of the van in relation
to the amount of revenue earned. As long as Natalie is
willing to track the number of kilometres driven over the
course of the year, then this would be the method
recommended.
Solutions Manual
9-90
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BYP 9-1 FINANCIAL REPORTING PROBLEM
(a)
(1)
(2)
(3)
$409,970,000
$216,376,000
$193,594,000
See Note 3 to the financial statements.
(b) $50,837,000 was the amount of net additions of capital
assets during 2006. (See the Consolidated Statements
of Cash Flows)
(c)
Building on leased land, furniture, fixtures, equipment,
automotive and leasehold improvements are amortized
using the straight-line basis. The building is amortized
on the declining-balance method. (See Note 2)
The amount of amortization expense reported in the
statement of operations for fiscal 2006 was $41,343,000.
(d) The expected useful life for calculating amortization on
the “furniture, fixtures, equipment. and automotive” was
3 to 5 years. (See Note 2)
(e)
Intangible assets comprise Goodwill, Trademarks and
Tradenames and Non-competition agreements. The
company did not report any impairment loss in 2006.
(See note 4)
Solutions Manual
9-91
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BYP 9-2 INTERPRETING FINANCIAL STATEMENTS
(a)
The $110 million investment in the new plant should be
treated as a capital expenditure. It will result in the
creation of an asset that will have a long life and the
cost will be matched with the revenue it generates
through annual amortization charges.
(b) Maple Leaf Foods could use the straight-line, decliningbalance or the units-of-activity method to amortize its
plant and equipment associated with its Saskatoon
plant. The straight-line method is simple to use and if
the assets are used at a consistent level will match
costs with revenue. Declining-balance is appropriate in
cases where the benefits are greater in the early years
of an asset’s life. The units-of-activity method would be
the most appropriate in this case as the levels of
production can be easily measured (production capacity
or number of hogs processed per week) and the levels
of production can change from one week to the next.
The units-of-activity method will provide the best
matching of costs with revenue.
(c)
Yes. My recommendation would still be the units-ofactivity method. Amortization expense would increase
as a result of the double shift because the number of
units being processed has increased.
Solutions Manual
9-92
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BYP 9-3 COLLABORATIVE LEARNING ACTIVITY
All of the material supplementing the collaborative learning
activity, including a suggested solution, can be found in the
Collaborative Learning section of the Instructor Resources site
accompanying this textbook.
Solutions Manual
9-93
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BYP 9-4 COMMUNICATION ACTIVITY
Memorandum
To:
From:
Jason Long, Owner
Ken Bond, Controller
Re:
Loss on Impairment of Long-Lived Assets
Long-lived assets are recorded at cost. In our company’s case
those assets include trucks, garages and equipment. The cost
of these assets is amortized over their useful lives, matching
costs of amortization to the revenue these assets have helped
us generate. The difference between the cost of an asset and its
accumulated amortization is what we refer to as net book value.
In some circumstances the net book value of a long-lived asset
may not be recoverable. If this happens and the market value
also permanently falls far below the assets’ net book value an
impairment has occurred. An impairment may occur because an
asset has become obsolete. In our company, an impairment
could arise when equipment we have purchased to repair and
maintain a truck can no longer perform the necessary service
on a truck because of technological change.
The impairment loss is equal to the amount by which the book
value of the asset is greater than market value.
The journal entry to record an impairment loss is:
Dr. Loss on impairment
Cr. Accumulated amortization
Solutions Manual
9-94
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BYP 9-4 (Continued)
When an impairment loss is recorded the cost of the long lived
asset does not change. The amount of accumulated
amortization increases by the amount of the impairment loss.
The net book value of the asset then decreases to reflect the
market value of the asset.
When an impairment loss is recorded net income is decreased
and in turn the value of the long lived asset recorded on our
company’s balance sheet also decreases.
In future years the annual amortization expense will need to be
revised. Future annual amortization expense will be based on
the revised net book value (which is equal to the market value
after the impairment loss is recorded), the revised residual
value, and the revised remaining useful life of the asset.
It is possible the residual value and the remaining useful life
may not be changed. In that case future annual amortization
expense will be less than it has been in previous years as a
result of the loss. If the residual value and the remaining useful
life change then the future amortization expense may be greater
or lower than the previous amortization expense.
Solutions Manual
9-95
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BYP 9-5 ETHICS CASE
(a)
The stakeholders in this situation are:
President of Finney Container Company
Controller of Finney Container Company
The owners of Finney Container Company
Potential investors in Finney Container Company
Creditors and others with a financial interest in the
company
(b) The intentional misstatement of the life of an asset or the
amount of the residual value is unethical, whatever the
reason. There is nothing unethical about changing the
estimate either of the life of an asset or of an asset's
residual value if the change is an attempt to better match
cost and revenues, and is a better allocation of the asset's
amortizable cost over the asset's useful life. In this case, it
appears from the controller's reaction that the revisions in
the life and residual value are intended only to improve net
income. This is unethical.
The fact that the competition uses a longer life on its
equipment is not necessarily relevant. The competition's
maintenance and repair policies and activities may be
different. The competition may use its equipment fewer
hours a year (e.g., one shift rather than two shifts daily)
than Finney Container Company.
Solutions Manual
9-96
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
BYP 9-5 (Continued)
(c)
Net income in the year of change is increased $320,000
($560,000 - $240,000), because amortization expense is
decreased $320,000, by implementing the president's
proposed changes.
Asset cost ...............................................................
Estimated residual .................................................
Amortizable cost ....................................................
Estimated useful life ..............................................
Amortization per year............................................
Old Estimate
$3,000,000
200,000
2,800,000
÷ 5 years
$ 560,000
Revised Estimate
Asset cost ............................................................... $3,000,000
Estimated residual .................................................
200,000
Amortizable cost .................................................... 2,800,000
Amortization taken to date ($560,000 x 2 years) .. 1,120,000
Remaining cost to be amortized ........................... 1,680,000
Remaining useful life (9 years - 2 years) ..............
÷ 7 years
Amortization per year............................................. $ 240,000
Solutions Manual
9-97
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.
Weygandt, Kieso, Kimmel, Trenholm, Kinnear
Accounting Principles, Third Canadian Edition
Legal Notice
Copyright
Copyright © 2009 by John Wiley & Sons Canada, Ltd. or related companies. All
rights reserved.
The data contained in these files are protected by copyright. This manual is
furnished under licence and may be used only in accordance with the terms of
such licence.
The material provided herein may not be downloaded, reproduced, stored in a
retrieval system, modified, made available on a network, used to create
derivative works, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording, scanning, or otherwise without the prior
written permission of John Wiley & Sons Canada, Ltd.
Solutions Manual
9-98
Chapter 9
Copyright © 2009 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is
strictly prohibited.