BHMHCCN2101

FINANCIAL ACCOUNTING
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Study Guide Exercise Answers (Chapter 9)
Property, Plant, and Equipment, Intangible Assets, and Natural
Resources
TRUE-FALSE QUESTIONS

1. True
2. True
3. True
4. False - The book value of an asset is equal to its cost minus accumulated depreciation.   
5. True  

CALCULATIONS

(1)
Cost: $102,240
Feedback: $94,000 - ($94,000  2%) + $7,800 + $940 + $1,380 = $102,240

(2)
(a)
(i) Straight-line Method (ii) 150%-declining- (iii) Units-of-
balance Method output
Method
Year Depreciation expense Depreciation expense Depreciation
expense
20X1 ( $105,000 - $5,000) x $105,000 x 150% x 1/10 ( $105,000 - $5,000)
1/10 x 9/12 = $7,500 x 1/2 = $7,875 x 4,000/50,000
= $8,000
20X2 ($105,000 - $5,000) x $(105,000 – $7,875) x ( $105,000 - $5,000)
1/10 = $10,000 15% = $14,569 x 3,500/50,000
=$7,000

(b) The disposal entry of the machine(used (a)(i) depreciation method and sold on 31 Dec 20x2) :

20X2 General Journal Debit Credit

Dec 31 Cash $88,000
Accumulated Depreciation 17,500
Machine $105,000
Gain on Disposal 500

(c) The disposal entry of the machine (used (a)(ii) depreciation method and sold during 20X3):

20X2 General Journal Debit Credit

Dec 31 Cash $68,000
Accumulated Depreciation *28,636
Machine $105,000
Loss on Disposal 8,364

Semester 1 2020-2021 Page 1 of 1

BHMHCCN2101
FINANCIAL ACCOUNTING
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*$7,875+ $14,569 + $(105,000-7,875-14,569)x15%x1/2 = $28,636 (round to integer)

Semester 1 2020-2021 Page 2 of 1