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CONCORDIA UNIVERSITY FINANCIAL ACCOUNTING

DEPARTMENT OF ACCOUNTANCY COMM 217 ALL SECTIONS

SUGGESTED SOLUTION - FINAL EXAMINATION - WINTER 2011

QUESTION 1 (24 MARKS) Multiple-choice (1.5 marks per correct answer)

|b |a |b |d |d |c |c |a |
|b |b |c |b |c |d |d |c |

QUESTION 2 (16 MARKS)
Req. 1 (3 marks)
Machine 60,000 $180,000 x (70,000/210,000) = $60,000
Building 120,000 $180,000 x (140,000/210,000) = $120,000 Note payable 100,000 Cash 80,000

Req. 2 (2 marks) Depreciation expense for the machine
2009: $60,000 x (2/10= 20%) = $12,000
2010: ($60,000 – $12,000) x (2/10= 20%) = $9,600

Req. 3 (4 marks) Depreciation expense for the building
2009: ($120,000 – $2,000) / 20 = $5,900
2010: ($120,000 + $50,000 – $4,100 – $5,900 / (20 – 1 + 6) = $6,400

Req. 4 (7 marks) Depreciation Expense 3,200 Accumulated depreciation 3,200

Cash 50,000 Note receivable 110,000 Accumulated depreciation 15,500 [$5,900 + $6,400 + ($6,400 x 6/12)] Gain on sale of building 5,500 Building 170,000

Net book value at June 30, 2011 = ($120,000 + $50,000) – 15,500 = $154,500

Gain on sale of building = ($50,000 + $110,000) – $154,500 = $5,500

QUESTION 3 (21 MARKS)
Req. 1 (4 marks) PV of principal = $313,600,000 x 0.4564 = $143,127,040 PV of interest