PPE

Question 1

Calculation for weighted average accumulated expenditures (WAAE) (Capitalize interest)

Answer 1

1. Calculate payments x weighted period (i.e. 6 mos/12 mos or 12/12) = weighted expenditure(s)
2. Weighted expenditure(s) x debt interest = avoidable interest
3. Calculate actual interest (debt x interest rate)
4. The lesser of avoidable & actual interest is capitalized
5. Interest not capitalized is expensed

Question 2

Recording a non-monetary exchange with commercial substance

Answer 2

1. CV of asset given up + cash paid (minus cash recvd)
2. Remove cost & any accum deprec
3. Recognize gain or loss on diff of step 1 & 2

Question 3

Double declining deprec method

Answer 3

Carrying value X 2/useful life = annual deprec expense

Question 4

Units of production depreciation

Answer 4

Cost - Salvage Value / Total Units in Life