Chapter 9 Fixed Assets and Intangible Assets 429Assume there were no patent sales during 2004.a. Reproduce the journal entry of patent purchases recorded for 2004.
b. Reproduce the adjusting journal entry for amortization expense recorded for 2004.
c. Estimate the average life of patents using the January 2, 2005, patent balance and amorti-
zation expense determined in (b). Round to the nearest year.Verizon Communications Inc.is a major telecommunications company in the United States.
Verizon’s balance sheet disclosed the following information regarding fixed assets:Dec. 31, 2004 Dec. 31, 2003
(in millions) (in millions)
Plant, property, and equipment $185,522 $180,940
Less accumulated depreciation 111,398 105,638
$ 74,124 $ 75,302Verizon’s revenue for 2004 was $71,283 million. The fixed asset turnover for the telecommuni-
cations industry averages 1.10.a. Determine Verizon’s fixed asset turnover ratio.
b. Interpret Verizon’s fixed asset turnover ratio.Carnival Corporation, a vacation cruise line, measures the operating capacity of its business us-
ing available lower berth days (ALBDs). An ALBD is the passenger capacity assuming two pas-
sengers per room (berth) multiplied by the number of cruise days in a year. Carnival has a
passenger capacity of 73 ships that can hold 118,040 passengers, assuming two passengers per
room. Carnival ran its ships an average of 282 cruise days per year. Carnival actually carried
5,037,553 passengers during the period for 34,419,047 berth days.a. Determine the average number of rooms (berths) per ship.
b. Determine the average length in days of a passenger cruise vacation.
c. Determine the utilization, or occupancy, percentage.Exercise 9-28
Fixed asset turnover ratio
Goal 6Exercise 9-29
Fixed asset utilization
Goal 6
a. 808.5
Problem 9-1A
Allocate payments and re-
ceipts to fixed asset accounts
Goal 1
ACCOUNTING APPLICATION PROBLEMS
The following payments and receipts are related to land, land improvements, and buildings ac-
quired for use in a wholesale apparel business. The receipts are identified by an asterisk.a. Finder’s fee paid to real estate agency $ 5,000
b. Cost of real estate acquired as a plant site: Land 100,000
Building 60,000
c. Fee paid to attorney for title search 3,500
d. Delinquent real estate taxes on property, assumed by purchaser 17,500
e. Cost of razing and removing building 16,250
f. Cost of filling and grading land 12,500
g. Proceeds from sale of salvage materials from old building 4,500*
h. Special assessment paid to city for extension of water main to the property 11,000
i. Premium on one-year insurance policy during construction 7,200
j. Architect’s and engineer’s fees for plans and supervision 50,000
k. Cost of repairing windstorm damage during construction 2,500
l. Cost of repairing vandalism damage during construction 1,800
m. Cost of trees and shrubbery planted 12,000
n. Cost of paving parking lot to be used by customers 18,500
o. Proceeds from insurance company for windstorm and vandalism damage 4,000*