Administrative and Financial Sciences

College of Administrative and Financial Sciences Assignment 3 Deadline: 19/07/2021@ 23:59 Course Name: Financial Accounting Student’s Name: Course Code: ACCT 201 Student’s ID Number: Semester: Summer CRN: Academic Year: 1441/1442 H For Instructor’s Use only Instructor’s Name: Students’ Grade: Marks Obtained/Out of 5 Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. 1 • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). • Submissions without this cover page will NOT be accepted. 2 Assignment Question(s): (Marks 5) Q1. DBC Corporation purchased a new machine on January 1st, 2010. The cost of this machine was $200,000. The company estimated that the machine would have a salvage value of $20,000 at the end of its service life. Its life is estimated at 5 years and its working hours are estimated at 40,000 hours. (2 Marks) Calculate deprecation expenses, accumulated depreciation and book value of the machine for each of the year using: i. Straight Line Method ii. Declining balance method (Based on twice the straight line rate) iii. Activity Method if DBC uses the machine hours as follows: Year Hours used 2010 7,000 2011 8,500 2012 8,000 2013 9,000 2014 7,500 You can use following table to present your answer: Year Depreciation Expense Accumulated Depreciation Answer: 3 Book Value Q2. ABC Company exchanged equipment used in its manufacturing operations plus $4,500 in cash for similar equipment used in the operations of XYZ Company. The following information pertains to the exchange: (2 Marks) ABC XYZ $63,000 $63,000 Accumulated Depreciation 42,750 22,500 Fair value of equipment 30,375 34,875 Equipment (cost) Cash given up 4,500 Required: i. Calculate gain or loss on exchange. ii. Prepare the journal entries to record the exchange on the books of both companies when: a) b) c) d) ABC has commercial substance ABC lacks commercial substance XYZ has commercial substance XYZ lacks commercial substance Answer: Q3. Discuss the Gross Profit Method and Retail inventory method of estimating inventory. Outline the basic differences between these methods. Provide numerical examples for each method. (1 Mark) Answer: . 4
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