AC 501 help A Guide to career/Snaptutorial AC 501 help A Guide to career/Snaptutorial | Page 6

Complete the amount of depreciation for each years 1 through 3 using the straight-
line depreciation method.
Complete the amount of depreciation for each years 1 through 3 using the sum-of-
the-years’-digits method.
Complete the amount of depreciation for each years 1 through 3 using the double-
declining balance method. (In performing your calculations, round constant
percentage to the nearest one-hundredth of a point and round answers to the
nearest dollar.
E10-27: (Capitalization of Interest) Harrisburg Furniture Company started
construction of a combination office and warehouse building for its own use at an
estimated cost of $ 5,000,000 on January 1, 2008. Harrisburg expected to complete
the building by December 31, 2008. Harrisburg has the following debt obligations
outstanding during the construction period.
Construction loan-12% interest, payable semiannually, issued
December 31, 2007
$
2,000,000
Short-term loan-10% interest, payable monthly, and principle payable
At maturity on May 30, 2009
1,400,000
Long-term loan- 11% interest, payable on January 1 of each
Year. Principle payable on January 1, 2012
1,000,000
E11-4: (Intangible Amortization) Presented below is selected information for Alatorre
Company.
Alatorre purchased a patent from Vania Co. for $ 1,000,000 on January 1, 2006. The
patent is being amortized over its remaining legal life of 10 years, expiring on
January 1, 2016. During 2008, Alatorre determined that the economic benefits of the
patent would not last longer than 6 years from the date of acquisition. What amount
should be reported in the balance sheet for the patent, net of accumulated
amortization, at December 31, 2008?
Alatorre bought a franchise from Alexander Co on January 1, 2007 for $ 400,000.
The carrying amount of the franchise on Alexander’s books on January 1, 2007, was
$ 500,000. The franchise agreement had an estimated useful life of 30 years.
Because Alatorre must enter a competitive bidding at the end of 2016, it is unlikely
that the franchise will be retained beyond 2016. What amount should be amortized
for the year ended December 31, 2008?
On January 1, 2008, Alatorre incurred organization costs of $ 275,000. What amount
of organization expense should be reported in 2008?
Alatorre purchased the license for distribution of a popular consumer product on
January 1, 2008, for $ 150,000. It is expected that this product will generate cash
flow for an indefinite period of time. The license has an initial term of 5 years but by
paying the normal fee, Alatorre can renew the license indefinitely for successive 5-
year terms. What amount should be amortized for the year ended December 31,
2008?
E11-18: (Goodwill Impairment) Presented below is net asset information related to
the Carlos Division of Santana, Inc.
Carlos Division
Net Assets
As of December 31, 2008
(in millions)