The Walt Disney Company reported revenue of dollar 25,269 million for 2001. Thei

Question

The Walt Disney Company reported revenue of dollar 25,269 million for 2001. Their accounts receivable balance was dollar 3,343 million in 2001 and dollar 3,599 million in 2000. Cash collected from customers equals dollar 25,013 million dollar21,926 million dollar 25,525 million None of the above In 2001, Walt Disney Company reported the cost of their parks, resorts and other related property at dollar19.089 million and accumulated depreciation on these assets at dollar 7,728 million. The remaining estimated life of these assets is approximately 40 percent. 60 percent. 50 percent. 19,089 Cannot be determined from the given information. On January 1, 20D, Haight, Inc., purchased a machine with a cash price of dollar 18,000. Haight also paid dollar 750 for transportation and installation. The expected useful life of the machine is 5 years and the residual value is dollar 1,000. Assuming straight-line depreciation, the annual depreciation expense would be dollar 3,600. dollar 3,550. dollar 3,750. dollar 3,400. None of the above is correct. Cash price = 18,000 Paid = dollar 75 Syrs rowe = 1,000 Bethany Company plans to depreciate a new building using double declining-balance depreciation. The building cost dollar 400,000. The estimated residual value of the building is dollar 50,000 and it has an expected useful life of 25 years. Assuming the first year's depreciation expense was recorded properly, what would be the amount of depreciation expense for the second year? dollar 15,360. dollar 16,000. dollar 29,440. dollar 32,000. None of the above is correct.

Explanation / Answer

1./

CASH COLLECTED FROM CUSTOMER

= ACCOUNTS RECEIVABLE 2000 + REPORTED REVENUE OF 2001 - ACCOUNTS RECEIVABLE OF 2001

= $3599 + $25269 - $3343

= $25525 MILLION

2./

REMAINNING BALANCE OF COST

= $19089 - $7728

= $11361

REMAINING LIFE

= $11361 / $19089

= 0.5952 OR 60% ROUNDED

3./

CAPITALIZED VALUE OF MACHINE

= PURCHASE PRICE + INSTALLATION COST

= $18000 + $750

= $18750

DEPRICIABLE VALUE

= CAPITALIZED VALUE - RESIDUAL VALUE

= $18750 - $1000

= $17750

STRAIGHT LINE DEPERICATION

= DEPERICIABLE VALUE / LIFE OF MACHINE

= $17750 / 5YEARS

= $3550

4./

STRAIGHT LINE DEPERICATION

= ($400000 - $50000) / 25YEARS

= $350000 / 25

= $14000

DEPERICIATION %

= $14000 / $350000

= 4%

DOUBLE DECLINNING DEPERICATION %

= 4% * 2

= 8%

DEPERICATION FOR FIRST YEAR

= $400000 * 8%

= $32000

BALANCE OF BUILDING END OF THE FIRST YEAR

= $400000 - $32000

= $368000

DEPERICATION FOR SECOND YEAR

= $368000 * 8%

= $29440

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