Problem 1
The following is a list of account titles and amounts (dollars in millions) reported by Hasbro, Inc., a leading manufacturer of games, toys, and interactive entertainment software for children and families:
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Buildings and improvements $206 goodwill $ 464
Prepaid expenses and other machinery and equipment 304
Current assets 212 accumulated depreciation 358
Allowance for doubtful accounts 39 inventories 169
Other noncurrent assets 280 other intangibles 1,146
Accumulated amortization land and improvements 18
(other intangibles) 435 accounts receivable 646
Cash and cash equivalents 521 tools, dies, and molds 30
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Required:
Prepare the asset section of the balance sheet for Hasbro, Inc., classifying the assets into Current Assets, property, plant, and Equipment (net), other Assets.
Problem 2
Computing Depreciation and Book value for Two Years Using Alternative Depreciation Methods and Interpreting the Impact on Cash Flows
Daisey Company bought a machine for $66,000 cash. The estimated useful life was four years, and the estimated residual value was $6,000. Assume that the estimated useful life in productive units is120,000. Units actually produced were 43,000 in year 1 and 45,000 years 2.
Required:
1. Determine the appropriate amounts to complete the following schedule. Show computations andround to the nearest dollar.
Depreciation Expense for Net Book Value at the End
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Method of Depreciation Year 1 Year 2 Year 1 Year 2
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Straight-line
Units-of-production
Double-declining- balance
2. Which method would result in the lowest EPS for year 1? For year 2?
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Problem 3
Recording the disposal of an asset three different sale prices
Federal express is the world's leading express-distribution company. In addition to the world's largest fleet of all-cargo aircraft, the company has more than 669 aircraft and 53,000 vehicles and trailers that pick up and deliver packages. Assume that Federal Express sold a small delivery truck that had been used in the business for three years. The record of the company reflected the following:
Delivery truck cost $28,000
Accumulated depreciation $23,000
Required:
1. Give the journal entry for the disposal of the truck, assuming that the truck sold for
a. $5,000
b. $5,600
c. $4,600
2. Based on the three preceding situations, explain the effects of the disposal of an asset.
Problem 4
Evaluating the effect of alternative depreciation methods on key ratios form analyst perspective
You are a financial analyst for General Motors and have been asked to determine the impact of alternative depreciation methods. For your analysis, you have been asked to compare methods based on a machine that cost $93,000. The estimated useful life is 13 years, and the estimatedresidualvalue is $2,000. The machine has an estimated useful life in productive output of 182,000 units.Actual output was 20,000 in year 1 and 16,000 in year 2. (Round results to the nearest dollar.)
Required:
1. For years 1 and 2 only, prepare separate depreciation schedules assuming:
a. Straight-line method.
b. Units-of-production method.
c. Double-declining-balance method.
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Method:
Depreciation Accumulated Net
Year Computation Expense Depreciation Book value
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At acquisition
1
2
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