Reference no: EM13492135

-On April 1, Paine Co. began construction of a small building. Payments of $120,000 were made monthly for four months beginning on April 1. The building was completed and ready for occupancy on August 1. For the purpose of determining the amount of interest cost to be capitalized, calculate the weighted-average accumulated expenditures on the building by completing the schedule below:

Date  Expenditures   Capitalization Period     Weighted-Average Expenditures

-A machine which cost $200,000 is acquired on October 1, 2010. Its estimated salvage value is $20,000 and its expected life is eight years.

Instructions

Calculate depreciation expense for 2010 and 2011 by each of the following methods, showing the figures used.

(a)   Double-declining balance

(b)   Sum-of-the-years'-digits

--In early January 2009, Lerner Corporation applied for a patent, incurring legal costs of $50,000. In January 2010, Lerner incurred $9,000 of legal fees in a successful defense of its patent.

Instructions

(a) Compute 2009 amortization, 12/31/09 carrying value, 2010 amortization, and 12/31/10 carrying value if the company amortizes the patent over 10 years.

(b) Compute the 2011 amortization and the 12/31/11 carrying value, assuming that at the beginning of 2011, based on new market research, Lerner determines that the fair value of the patent is $44,000. Estimated future cash flows from the patent are $45,000 on January 3, 2011.