SILABUS AK-2

1. Problem 3- AK 2 UTS Genap 2015

2. Problem 2- AK 2 UAS Genap 2014 Part (A)

Problem 2.

(25%) (A)

On January 1, 2011, Hester Co. sells machinery to Beck Corp. at its fair value of $480,000 and

leases it back. The machinery had a carrying value of $420,000, the lease is for 10 years and

the implicit rate is 10%. The lease payments of $71,000 start on January 1, 2011. Hester uses

straight-line depreciation and there is no residual value.

Instructions

(a) Prepare all of Hester's entries for 2011.

(b) Prepare all of Beck's entries for 2011.

3.Problem 3- AK 2 UAS Genap 2014

Problem 3. (20%)

Hunt Co. at the end of 2012, its first year of operations, prepared a reconciliation between

pretax financial income and taxable income as follows:

Pretax financial income $ 750,000

Estimated expenses deductible for taxes when paid 1,200,000

Extra depreciation (1,350,000)

Taxable income $ 600,000

Estimated warranty expense of $800,000 will be deductible in 2013, $300,000 in 2014, and

$100,000 in 2015. The use of the depreciable assets will result in taxable amounts of $450,000

in each of the next three years.

Instructions

(a) Prepare a table of future taxable and deductible amounts.

(b) Prepare the journal entry to record income tax expense, deferred income taxes, and

income taxes payable for 2012, assuming an income tax rate of 40% for all years.

4.Problem 4- AK 2 Mentoring UAS Genap 2017

In January 1, 2010 Kopet Inc. purchased a building and an equipment that have the

following useful lives, residual values, and costs.

• Building 50 year estimated useful life, $150,000 residual value, $3,750,000 cost

• Equipment, 10 years estimated useful life, $ 10,000 residual value, $120,000 cost

The building has been depreciated under double declining balance through 2014. In

2015, the company decided to switch to straight line method of depreciation. Kopet Inc.

also decided to change the total useful life of the equipment to 7 years with a residual

value of $5,000. The equipment has been depreciated using the straight line method.

(1) Instructions:

1) Prepare the journal entry(ies) necessary to record the depreciation expense on

building in 2015

2) Compute the depreciation expense on the equipment for 2015

(2) You have been assigned to examine the financial statement of Zale Company for the

year ended

December 31, 2010. You discover the following situations.

1. Depreciation of $3,200 for 2010 on delivery vehicles was not recorded.

2. The physical inventory count on December 31, 2009, improperly excluded

merchandise costing $19,000 that had been temporarily stored in a public warehouse.

Zale uses a periodic inventory system.

3. In 2010, the company sold for $3,700 fully depreciated equipment that originally

cost $25,000. The company credited the proceeds from the sale to the Equipment

account.

4. During November 2010, a competitor company filed a patent-infringement suit

against Zale claiming damages of $220,000. The company’s legal counsel has indicated

that an unfavorable verdict is probable and a reasonable estimate of the court’s award to

the competitor is $125,000. The company has not reflected or disclosed this situation in

the financial statements.

5. At December 31, 2010, an analysis of payroll information show accrued salaries of

$12,200. The Accrued Salaries Payable account had a balance of $16,000 at December

31, 2010, which was unchanged from its balance at December 31, 2009.

6. A large piece of equipment was purchased on January 3, 2010, for $40,000 and was

charged to Repair Expense. The equipment is estimated t have a service life of 8 years

and no residual value. Zale normally uses the straight line depreciation method for this

type of equipment.

7. A $12,000 insurance premium paid on July 1, 2009, for a policy that expires on June

30, 2012, was charged to insurance expense.

ANSWER :

1.

Basic EPS

NI $560,000.00

Shares Outstanding 400,000.00

Basic EPS ($560,000/400,000) $1.40

Dilluted EPS

Convertible Bonds

Incremental numerator effect (6% x 300 x $1,000 x (1-­­30%)) $12,600.00

incremental denominator effect (300 x 50) 15,000.00

Per share effect ($12,600/15,000) $0.84

Ordinary Shares Option

average number of shares related to options

outstanding:

16000.00 Option price per share $20.00

Proceeds upon exercise of options (16,000 x $20) $320,000.00

average market price of ordinary shares $32.00

T/S that could be repurchased with proceeds ($320,000/$32) 10000

Excess of shares under option over the TS that

could be repurchased-­­potential ordinary

incremental shares (16,000 -­­ 10,000)

6000.00

Per share effect ($0/6,000) $0.00

Ranking

O/S option $0.00

convertible bonds $0.84

Diluted EPS

with O/S option $1.38

with convertible bonds* $1.36

*)choose the most dilutive

2. Problem 2A;

(a)

Hester Co.(Lessee)

January 1,2011

Cash 480,000

Machinery 420,000

Unearned Profit on Sale-

Leaseback

60,000

Lease Machinery 480,000

Lease Liability 480,000

Lease Liability 71,000

Cash 71,000

December 31,2011

Depreciation Expense 48,000

Acc. Depre. –Finance Lease 48,000

Unearned Profit on Sales

Leaseback

6,000

Depre.Expense 6,000

Interest Expense 40,900

Interest Payable 40,900

(b)

Beck. Corp. (Lessor)

January 1,2011

Machinery 480,000

Cash 480,000

Lease Receivable 480,000

Machinery 480,000

Cash 71,000

Lease Receivable 71,000

December 31,2011

Interest Receviable 40,900

Interest Revenue 40,900

3. (a)

2013 2014 2015 Total

Future Taxable

(deductible) Amounts

Warranties (800,000) (300,000) (100,000) (1,200,000)

Excess Depreciation 450,000 450,000 450,000 1,350,000

(b)

Income Tax Expense 300,000

Deffered Tax Asset 480,000

Deffered Tax Liability 540,000

Income Tax Payable 240,000

Calculation :

Income Tax Expense = 240,000 + 540,000-480,000

Deffered Tax Asset = 1,200,000 x 40%

Deffered Tax Liability = 1,350,000 x 40%

Income Tax Payable = 600,000 x 40%

4.

a) Beginning Value Depreciation expense

Accumulated Depre. Ending Value

2010 3,750,000 150,000 150,000 3,600,000

2011 3,600,000 144,000 294,000 3,456,000

2012 3,456,000 138,240 432,240 3,317,760

2013 3,317,760 132,710 564,950 3,185,050

2014 3,185,050 127,402 692,352 3,057,648

on 2015

Building

3,750,000

accumulated depreciation 692,352

Book value of bulding 3,057,648

Depreciation charge 67,948

JOURNAL

Depreciation expense

67,948

Accumulated depreciation

67,948

b) Depreciation expense before 2015 11,000

Equipment 120,000

Accumulated depreciation 55,000

Book value of Equipment 65,000

Depreciation charge 30,000