How do I answer the all these questions?

1. Partial year depreciation and sale of an asset

On January 2, 2015, Enigma Clothing Consignments purchased showroom fixtures for $11,000 cash, expecting the fixtures to remain in service for five years. Enigma has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2015, Repeat sold the fixtures for $6,200 cash.

Requirement

A. Record both depreciation for 2015 and sale of the fixtures on October 31, 2015.

ID: Name: Plant Assets Homework - End of Chapter 1. Partial year depreciation and sale of an asset On January 2, 2015, Enigma Clothing Consignments purchased showroom fixtures for $11,000 cash, expecting the fixtures to remain in service for five years. Enigma has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2015, Repeat sold the fixtures for $6,200 cash. Requirement A. Record both depreciation for 2015 and sale of the fixtures on October 31, 2015. 2. Sale of asset at gain or loss Live Nation purchased equipment on January 1, 2012, for $36,000. Live Nation expected the equipment to last for four years and to have a residual value of $4,000. Suppose Live Nation sold the equipment for $26,000 on December 31, 2013, after using the equipment for two full years. Assume depreciation for 2013 has been recorded. Requirement A. Journalize the sale of the equipment, assuming straight-line depreciation was used. 3. Ethicscapitalizing vs. expensing assets Delta Airlines repaired one of its Boeing 787 aircrafts at a cost of $150,000. Delta erroneously capitalized this cost as part of the cost of the plane. Requirements A. How will this accounting error affect Deltas' net income? Ignore depreciation. B. Should the company correct the error or can it ignore the error to report more favorable earnings results? Why? 4. Distinguishing capital expenditures from expenses Consider the following expenditures: Type Expenditure Purchase price. Ordinary recurring repairs to keep the machinery in good working order. Lubrication before machinery is placed in service. Periodic lubrication after machinery is placed in service. Major overhaul to extend useful life by three years. Sales tax paid on the purchase price. Transportation and insurance while machinery is in transit from seller to buyer. Installation. Training of personnel for initial operation of the machinery. Income tax paid on income earned from the sale of products manufactured by the machinery. Requirements: Classify each of the expenditures as a capital expenditure [C] or an expense related to machinery [O] 5. Ethics On May 31, 2012, Fugazi Delivery, the overnight shipper, had total assets of $21,000,000,000 and total liabilities of $13,000,000,000. Included among the assets were property, plant, and equipment with a cost of $17,000,000,000 and accumulated depreciation of $10,000,000,000. During the year ended May 31, 2012, Fugazi Delivery earned total revenues of $28,000,000,000 and had total expenses of $25,000,000,000, of which $8,000,000,000 was depreciation expenses. The CFO and the controller are concerned that the results of 2012 will make investors unhappy. Additionally, both hold stock options to purchase shares at a reduced price, so they would like to see the market price continue to grow. They decide to \"extend\" the life of assets so that depreciation will be reduced to $5,000,000,000 for 2012. Requirements 1. Calculate before and after net income and show the change to net income due to their decision? 2. What appears to be their motivation for the change in asset lives? Is this ethical? Explain. 6. Capitalized asset cost and first year depreciation, and identifying depreciation results that meet management objectives On January 3, 2012, Minutemen Delivery Service purchased a truck at a cost of $90,000. Before placing the truck in service, Minutemen spent $3,000 painting it, $1,500 replacing tires, and $4,500 overhauling the engine. The truck should remain in service for five years and have a residual value of $9,000. The truck's annual mileage is expected to be 22,500 miles in each of the first four years and 10,000 miles in the fifth year - 100,000 miles in total. In deciding which depreciation method to use, Dee Boon, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance). Requirements A. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. B. Minutemen prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income taxes in the early years. Consider the first year that Minutemen uses the truck. Identify the depreciation methods that meet the general manager's objectives, assuming the income tax authorities permit the use of any of the methods