Page 447 - Accounting Principles (A Business Perspective)

10. Property, plant, and equipment

True. Plant asset subsidiary ledgers provide detailed information that the general ledger account cannot
provide and thus give better control over plant assets.
Multiple-choice

b. The depreciation expense for 2010 using the straight-line method is computed as follows:
USD 440,000−USD40,000 =USD 40,000
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100 per cent
d. Double-declining balance rate = 2× =20 per cent
10
6
Depreciation expense for 2010 = 2 per cent×USD 440,000× =USD 44,000
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e. At the beginning of 2010, the balance of accumulated depreciation is USD 2,800 (annual depreciation of USD
1,400 X 2) and book value is USD 7,200, or (USD 10,000 - USD 2,800). The revised annual depreciation expense is
USD7,200−USD1,000
USD 3,100, or [ ¿ .
2
a. The error in recording a capital expenditure as a revenue expenditure results in an overstatement of current
year's expense, as well as an understatement of current year's net income.

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