Answer to Question 1
Monitoring
Answer to Question 2
Part A:
Assets
Liabilities Shareholders' equity
CC Retained earnings
(20,000) Cash
+ 72,000 Building
+ 18,000 Land + 70,000 Notes payable
For the building: (80,000 / 100,000) x 90,000 = 72,000For the land: (20,000 / 100,000) x 90,000 = 18,000
Part B:
Assets
Liabilities Shareholders' equity
CC Retained earnings
(2,000) Accumulated depreciation (2,000) Depreciation
expense
Straight-line depreciation:(72,000 32,000) / 20 years = 2,000 per year
Part C:
Assets
Liabilities Shareholders' equity
CC Retained earnings
(7,200) Accumulated
depreciation (7,200) Depreciation
expense
Double-declining balance depreciation:72,000 x (2 / 20 years) = 7,200 for the first year(72,000 7,200) x (2 / 20) = 6,480 for the second year(72,000 13,680) x (2 / 20) = 5,832 for the third year
Part D:
Straight-line Double-declining balance
1. Depreciation expense 2,000 5,832
2. Accumulated depreciation (6,000) = 3 x (2,000) (19,512)
3. Building (net of accumulated
depreciation) 66,000 = 72,000 6,000 52,488 = 72,000 19,512
4. Land 18,000 18,000