Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 7, Problem 18CE
To determine
Cost of a Fixed Asset:
Cost of a Fixed Asset is the cost incurred on acquiring the Fixed asset and includes any expenditure which is necessary in preparing the asset for its use.
To calculate:
To determine the cost of the Machine.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
18.
Acquisition Cost
Cox Company recently purchased a machine by paying $8,500 cash and signing a six-month, 10% note for $10,000. In addition to the purchase price, Cox incurred the following costs related to the machine: freight charges, $800; interest charges, $500; special foundation for machine, $400; installation costs, $1,100.
Required:
Determine the cost of the machine.
build a modelA purchased machine cost $320,000, with delivery and installation charges amounting to $30,000. The declared salvage value was $50,000. Its useful life is 10 years. a) Compute the SL depreciation schedule over its useful life. b) Compute the DDB depreciation schedule over its useful life. c) Compute the MACRS depreciation schedule. Its ADR life is 12 years. d) Early in Year 4, the company changed its product mix and found that it no longer needed the machine. One of its competitors agreed to buy the machine for $110,000. Determine the loss, gain, or recapture on the sale. Use the MACRS schedule
the company paid $500,000 to purchase the following:
a building with an appraised valued of $200,000
an operating permit valued at $100,000 and
ongoing reaserch and development projects valued at $150,00. In addition, it is estimated that the fair value of the order backlog associated with the products manufactured in the building is $100,000; this order backlog is includes as part of the purchase. make the journal entry necessary to revord this cash purchase.
Chapter 7 Solutions
Cornerstones of Financial Accounting
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - How does the cost concept affect accounting for...Ch. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - What factors must be known or estimated in order...Ch. 7 - How do the accelerated and straight-line...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - When depreciation is recorded each period, what...Ch. 7 - Prob. 4MCQCh. 7 - Refer to the information for Cox Inc. above. What...Ch. 7 - Refer to the information for Cox Inc. above. What...Ch. 7 - Which of the following statements is true...Ch. 7 - Normal repair and maintenance of an asset is an...Ch. 7 - Chapman Inc. purchased a piece of equipment in...Ch. 7 - Bradley Company purchased a machine for $34,000 on...Ch. 7 - Prob. 11MCQCh. 7 - Which of the following statements is true? a. The...Ch. 7 - Prob. 13MCQCh. 7 - Heston Company acquired a patent on January 1,...Ch. 7 - Prob. 15MCQCh. 7 - ( Appendix 7 A) Murnane Company purchased a...Ch. 7 - Prob. 17CECh. 7 - Prob. 18CECh. 7 - Straight-Line Depreciation Refer to the...Ch. 7 - Prob. 20CECh. 7 - Prob. 21CECh. 7 - Revision of Depreciation On January 1, 2017, Slade...Ch. 7 - Disposal of an Operating Asset On August 30,...Ch. 7 - Prob. 24CECh. 7 - Cost of Intangible Assets Advanced Technological...Ch. 7 - Prob. 26CECh. 7 - Prob. 27CECh. 7 - (Appendix 7A) Impairment Brown Industries had two...Ch. 7 - Prob. 29BECh. 7 - Acquisition Cost Desert State University installed...Ch. 7 - Depreciation Concepts Listed below are concepts...Ch. 7 - Depreciation Methods On January 1, 2019, Loeffler...Ch. 7 - Expenditures After Acquisition Listed below are...Ch. 7 - Revision of Depreciation On January 1, 2019, the...Ch. 7 - Disposal of an Operating Asset Jolie Company owns...Ch. 7 - Analyzing Fixed Assets Pitt reported the following...Ch. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - ( Appendix 7A) Impairment Listed below is...Ch. 7 - Prob. 40ECh. 7 - Prob. 41ECh. 7 - Prob. 42ECh. 7 - Prob. 43ECh. 7 - Cost of a Fixed Asset Colson Photography Service...Ch. 7 - Prob. 45ECh. 7 - Cost and Depreciation On January 1, 2019, Quick...Ch. 7 - Characteristics of Depreciation Methods Below is a...Ch. 7 - Prob. 48ECh. 7 - Depreciation Methods Clearcopy, a printing...Ch. 7 - Depreciation Methods Quick-as-Lightning, a...Ch. 7 - Inferring Original Cost Barton Construction...Ch. 7 - Choice Among Depreciation Methods Walnut Ridge...Ch. 7 - Revision of Depreciation On January 1, 2017,...Ch. 7 - Capital versus Revenue Expenditure Warrick Water...Ch. 7 - Expenditures After Acquisition The following...Ch. 7 - Expenditures After Acquisition Roanoke...Ch. 7 - Prob. 57ECh. 7 - Prob. 58ECh. 7 - Disposal of Fixed Asset Pacifica Manufacturing...Ch. 7 - Prob. 60ECh. 7 - Prob. 61ECh. 7 - Prob. 62ECh. 7 - Balance Sheet Presentation The following...Ch. 7 - Prob. 64ECh. 7 - Prob. 65ECh. 7 - Prob. 66ECh. 7 - Prob. 67ECh. 7 - Financial Statement Presentation of Operating...Ch. 7 - A Cost of a Fixed Asset Mist City Car Wash...Ch. 7 - Depreciation Methods Hansen Supermarkets purchased...Ch. 7 - Depreciation Schedules Wendt Corporation acquired...Ch. 7 - Expenditures After Acquisition Pasta, a restaurant...Ch. 7 - Prob. 73APSACh. 7 - Prob. 74APSACh. 7 - Prob. 75APSACh. 7 - Prob. 76APSACh. 7 - Prob. 68BPSBCh. 7 - Cost of a Fixed Asset Metropolis Country Club...Ch. 7 - Depreciation Methods Graphic Design Inc. purchased...Ch. 7 - Depreciation Schedules Dunn Corporation acquired a...Ch. 7 - Prob. 72BPSBCh. 7 - Prob. 73BPSBCh. 7 - Prob. 74BPSBCh. 7 - Prob. 75BPSBCh. 7 - Prob. 76BPSBCh. 7 - Prob. 77.1CCh. 7 - Prob. 77.2CCh. 7 - Prob. 78.1CCh. 7 - Prob. 78.2CCh. 7 - Prob. 79.1CCh. 7 - Prob. 79.2CCh. 7 - Prob. 79.3CCh. 7 - Prob. 80.1CCh. 7 - Prob. 80.2CCh. 7 - Prob. 80.3CCh. 7 - Prob. 80.4CCh. 7 - Prob. 80.5CCh. 7 - Prob. 80.6CCh. 7 - Prob. 80.7CCh. 7 - Prob. 80.8CCh. 7 - Comparative Analysis: Under Armour, Inc., versus...Ch. 7 - Prob. 81.2CCh. 7 - Comparative Analysis: Under Armour, Inc., versus...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Expenditures After Acquisition Listed below are several transactions: a. Paid $80 cash to replace a minor part of an air conditioning system. b. Paid $40,000 to fix structural damage to a building. c. Paid $8,000 for monthly salaries. d. Paid $12,000 to replace a manual cutting machine with a computer-controlled machine. e. Paid $1,000 related to the annual painting of a building. Required: Classify each transaction as either a revenue expenditure, a capital expenditure, or neither.arrow_forwardComprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?arrow_forwardRequired information (The following information applies to the questions displayed below) Precision Construction entered into the following transactions during a recent year. January 2 Purchased a bulldozer for $250, e00 by paying $20,000 cash and signing a $23a, 00e note due in five years. January 3 Replaced the steel tracks on the bulldozer at a cost of $2e,0e0, purchased on account. The new steel tracks increase the bulldozer's operating efficiency. January 30 Wrote a check for the amount owed on account for the work conpleted on January 3. February 1 Repaired the leather seat on the bulldozer and wrote a check for the full $800 cost. March 1 Paid $3,600 cash for the rights to use computer software for a two-year period. Required: 1-a. Complete the table below, for the above transactions. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.) Stockholders' Equity Date Assets Llabilities January 02 January 02 January 03 January 30 February 01 March…arrow_forward
- Required information [The following information applies to the questions displayed below.] Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $810,000. The estimated market values of the purchased assets are building, $496,800; land, $248,400; land improvements, $27,600; and four vehicles, $147,200. Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the first-yea depreciation expense on the building using the straight-line method, assuming a 15-year life and a $30,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Allocate the lump-sum purchase price to the separate assets purchased. Allocation of total cost Building Land Required 2…arrow_forwardTeradene Corporation purchased land as a factory site and contracted with Maxtor Construction to construct afactory. Teradene made the following expenditures related to the acquisition of the land, building, and equipmentfor the factory:Purchase price of the land $1,200,000Demolition and removal of old building 80,000Clearing and grading the land before construction 150,000Various closing costs in connection with acquiring the land 42,000Architect’s fee for the plans for the new building 50,000Payments to Maxtor for building construction 3,250,000Equipment purchased 860,000Freight charges on equipment 32,000Trees, plants, and other landscaping 45,000Installation of a sprinkler system for the landscaping 5,000Cost to build special platforms and install wiring for the equipment 12,000Cost of trial runs to ensure proper installation of the equipment 7,000Fire and theft insurance on the factory for the first year of use 24,000In addition to the above expenditures, Teradene purchased four…arrow_forwardJosephine Company acquired a tract of land containing an extractable natural resource. The entity is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological survey indicated that the recoverable reserves would be 2,000,000 tons and that the extraction will be completed in five years. Relevant cost of information follows: Land 9,000,000 Exploration and development costs 1,000,000 Expected cash flow for restoration costs 1,500,000 Credit- adjusted risk-free interest rate 10% PV of 1 at 10% for 5 periods 0.62 What is the depletion charge per ton of extracted material?arrow_forward
- The Flintstone Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $119,000 at the beginning of the year was expected to deliver 202,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site: Construction Sites: Multiple Choice C $17,144 Tons Delivered: How much truck depreciation should be allocated to Site A? Note: Do not round Intermediate calculations. Round your answer to the nearest dollar. $1,296 $1,190 A 2,200 None of the answers are correct. B 3,700 C 4, 200 D 1,700arrow_forwardBorrowing cost (IAS-23) If the acquisition/construction of asset is financed through borrowings then any interest paid on such debt would be capitalized in the value of asset. Test your understanding.3 Acquisition Costs of Realty: Pollachek Co. purchased land as a factory site for $450,000. Process of tearing down two old buildings on the site and constructing the factory required 6 months, The company paid $42,000 to raze the old buildings and sold salvaged lumber and brick for $6,300. Legal fees of $1,850 were paid for title investigation and drawing the purchase contract. Pollachek paid $2,200 to an engineering firm for a land survey, and $65,000 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,500, and a liability insurance premium paid during construction was $900. The contractor's charge for construction was $2,740,000. The company paid the contractor in two installments: $1,200,000 at…arrow_forwardPS Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $32,000 salvage value. Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $800,000. The estimated market values of the purchased assets are building, $537,300; land, $318,400; land improvements, $39,800; and four vehicles, $99,500. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation. Complete this question by entering your answers in the tabs below. Required 1A Allocate the lump-sum purchase price to the separate assets purchased. Allocation of total cost Building Land Required 1B Required 2 Land improvements Vehicles Total Required 3 Estimated Market Value Percent of Total % % % % %…arrow_forward
- The Flintstone Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $125,000 at the beginning of the year was expected to deliver 208,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site: Construction Sites: Tons Delivered: Multiple Choice $20,246 $1,683 How much truck depreciation should be allocated to Site A? Note: Do not round Intermediate calculations. Round your answer to the nearest dollar. $1,250 2,800 None of the answers are correct. B 4,300 4,800 2,300arrow_forwardUnilever acquires land for $86,000 cash. Additional costs are as follows: removal of shed $300, broker commission $1,530, paving of parking lot $10,000, gardening $1,500, closing costs $560, and a salvage value of lumber of shed $120. Unilever will record the acquisition cost of the land as:arrow_forwardE10-8 Asset Acquired by Donation A developer of a large shopping center donated a building and land to Hetting Co. without charge. The agreement provided that the company employ 350 people for 10 years. The land was appraised at $65,000 and the building at $44,000. Required: 1. Prepare the journal entry to record the acquisition of the land and building. 2. Next Level How should the 10-year agreement be reported in the financial statements? 3. Next Level If the title were not to pass until after 10 years, would your answers to Requirements 1 and 2 change?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning