Accounting Homework 3
Ganisheva Daria
Chapter 10
E10.7
Total avoidable interest: $426,840
Weighted Average Interest Rate: $270,000 / $2,700,000 = 10.38%
Total Actual Interest: $240,000 + $160,000 + $110,000 = $510,000
Capitalized Cost: $5,200,000 + $426,840 = $5,626,840
Annual Depreciation Expense: (5,626,840−300,000)/30 years = $177,561
E10.17
Accounts and Explanation
Debit ($)
Credit ($)
Accumulated Depreciation (old)
140
New Machine
405
Loss on Disposal
65
Cash
320
Old Machine
290
(To eliminate all accounts associated with the old machine and cash, establish the new machine at
its fair value, and record the resulting loss)
Chapter 11
E11.11
a) No correcting entry is required since revisions to estimates are managed in the current and
future periods.
b) Depreciation Expense ………………… 3,500
Accumulated Depreciation—Equipment ………….. 3,500
E11.18
a) Impairment Loss….$1,000,000
Assets………………………$1,000,000
Income Statement…..$1,000,000
Impairment Loss………………$1,000,000
b) Depreciation Expense……….$1,750,000
Accumulated Depreciation……………$1,750,000
c) Assets……………………………$750,000
Recovery of Impairment Loss……………$750,000
Recovery of Impairment Loss…$750,000
Income Statement………………………$750,000
E11.27
a) Depreciation Expense…………….€2,000
Accumulated Depreciation………..€2,000
b) For depreciation:
Depreciation Expense…………….€2,000
Accumulated Depreciation…………€2,000
For revaluation decrease:
Revaluation Surplus………………€1,000
Accumulated Depreciation…………€1,000
c) Depreciation Expense…………..€1,750
Accumulated Depreciation……….€1,750
Chapter 12
E12.12
Account Titles & Explanations
Cash
Copyrights
Buildings
Equipment ($175,000 - $5,000)
Land ($70,000 + $50,000)
Goodwill
Accounts Payable
Notes Payable (Long Term)
Cash
Debit
$100,000
$30,000
$200,000
$170,000
$120,000
$110,000
Credit
$50,000
$300,000
$380,000
E12.16
a) The €325,000 expenditure should be recorded in a research and development (R&D) account and
presented in the financial statements as either a current liability or an expense on the income
statement, in accordance with the company's accounting policies. This accounting treatment is
based on the assumption that the research project will not generate any future economic benefits.
b) The journal entry to record costs associated with the successful patent:
Debit: Patent Amortization Expense
Credit: Patent Asset
Debit: R&D Expense
Credit: Accounts Payable (for the €110,000 development costs)
Debit: Legal and Administrative Expense
Credit: Accounts Payable (for the €24,000 expenses incurred in obtaining the patent)
c) The €60,000 spent on engineering and consulting in 2023 should be recorded as either a current
liability or an R&D expense, based on the company's accounting policies. If the product turns out
not to be economically viable, these costs will be expensed in the period they occur. Conversely, if
the product does achieve economic viability, the costs will be capitalized and amortized over its
expected useful life.