1. On November 4, 2020, GT Corporation sells a piece of its equipment. GT Corporation had initially purchased the equipment for $350,000. The company had recorded $230,000 in depreciation for this piece of equipment as of the date of sale. If GT Corporation receive S150,000 cash when they sell the equipment, they will report a on their November 2020 Income Statement; if they instead receive $100,000 cash when they sell the equipment, they will report a a. $150,000 gain: $100,000 gain. b. $80,000 gain, $130,000 loss. c. $30,000 loss; $20,000 gain. d. $30,000 gain; $20,000 loss. 2. When a company records a capital expenditure as a revenue expenditure (i.e. expenses it), what affect does this error have on the company's financial statements in that year? Total Assets are understated and Net Income is understated. Total Assets are overstated and Net Income is properly stated. Total Assets are overstated and Net Income is overstated. d. Total Assets are understated and Net Income is overstated. a. b. c. 3. Gina Corporation purchases new office equipment for $2,500,000 on January 1, 2020. Gina estimates that the equipment has a $100,000 residual value and a useful life of 6 years. Gina uses the straight-line method to record depreciation. Assume that on January 1, 2023, after three years, Gina estimates that the equipment's remaining useful life is 8 years and residual value is $60,000. A depreciation schedule would show _depreciation expense for 2023. $155,000 b. $221,818 $248.000 d. $305.000 $400,000 a. c. e. New Style Corporation is a company that manufactures and sells chairs. On 1/1/20, the company purchases a piece of manufacturing equipment for $3,100,000 cash. The expected residual value is $200,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment - 1,200,000 chairs in 2020; 1,400,000 chairs in 2021; 1,000,000 chairs in 2022; and 600,000 chairs 2023; and 800,000 chairs in 2024. SHOW YOUR WORK! Round per unit to the nearest cent. Assume that New Style Corporation uses the Straight-Line method of depreciation. 2020 2021 2022 2023 2024 Depreciation Expense for the year Accumulated Depreciation at year-end PPE, Net on year-end Balance Sheet Assume that New Style Corporation uses the Units-of-Activity method of depreciation. 2020 2021 2022 2023 2024 Depreciation Expense for the year Accumulated Depreciation at year-end PPE, Net on year-end Balance Sheet Notes to Consolidated Financial Statements (partial) Footnote 1. Summary of Significant Accounting Policies 1.1 About Business Walmart Inc. helps people around the world save money and live better - anytime and anywhere - by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, the Company is striving to continuously improve a customer-centric experience that seamlessly integrates eCommerce and retail stores in an omni-channel offering that saves time for its customers. Each week, the Company serves over 265 million customers who visit approximately 11.500 stores and numerous Commerce websites under 56 banners in 27 countries. The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club 1.2 Fiscal Year The company's fiscal year ends on January 31 Our discussion is as of and for the fiscal years ended January 31, 2020 ("fiscal 2020"), January 31, 2019 ("fiscal 2019") and January 31, 2018 ("fiscal 2018") 1.8 Property. Plant, and Equipment Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as carned or incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred. The Company's depreciates the assets on a straight-line basis over the following ranges: buildings and improvements between 3 and 40 years, fixtures and equipment between 1 and 30 years, transportation cquipment between 3 and 15 years. Depreciation expense totaled $9,570 million and 59.398 million in fiscal years 2020 and 2019, respectively. The following table summarizes property and equipment (in millions) As of January 31. 2020 2019 Land $ 24,619 $ 24,526 Buildings and improvements 105,674 101.006 Fixtures and equipment 58,607 54.488 Transportation equipment 2.377 2.316 Construction in progress 3.751 3,474 Total property, plant and equipment 195,028 185,810 Accumulated depreciation (89.820 (81.493) Property, plant and equipment, net S 105,208 S 104.317 1.11 Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired. Goodwill and indefinite-lived intangible assets are not amortized rather, they are evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided. The following table reflects goodwill activity for fiscal 2020 and 2019 (in millions) Goodwill balance as of February 1, 2018 S 18.242 Acquisitions 13,682 Other (743) Goodwill balance as of January 31, 2019 S 31.181 Acquisitions 41 Other (149) Goodwill balance as of January 31, 2020 S31073 Total amortization expense for intangible assets subject to amortization was $1.417 million and S1,1280 million in fiscal year 2020 and 2019, respectively. Walmart, Inc. Financial Statements (partial) Walmart Consolidated Balance Sheets In millions of dollars As of ASSETS Jan 31, 2020 Cash and cash equivalents $ 9,465 Accounts receivable, net 6,284 Inventories 44,435 Prepaid expenses and other current assets 1,622 Total current assets $ 61,806 Property, plant, and equipment, net 105,208 Goodwill 31,073 Other long-term assets 38,408 Total assets S 236,495 As of Jan 31, 2019 $ 7.722 6,283 44.269 3,623 $ 61,897 104.317 31,181 21,900 S 219.295 LIABILITIES AND STOCKHOLDER'S EQUITY Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Current portion of long-term debt Other current liabilities Total current liabilities Long-term debt Other long-term liabilities Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity S 575 46,973 22.296 280 5,362 2.304 77,790 43,714 33,439 154.943 3,531 78,021 81,552 $ 236,495 S 5.225 47,060 22.159 428 1.876 729 77,477 43,520 18,664 139,661 3,253 76,381 79.634 $ 219,295