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During year 1, Perez Manufacturing Company incurred $117,500,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in year 1. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $64 per unit. Packaging, shipping, and sales commissions are expected to be $11 per unit. Perez expects to sell 2,500,000 batteries before new research renders the battery design technologically obsolete. During year 1, Perez made 434,000 batteries and sold 395,000 of them. Fill in the GAAP-based income statement for year 1. Use the sales price = 93.75 PEREZ MANUFACTURING COMPANY Income Statement Sales revenue Cost of goods sold Gross margin Depreciation expense Inventory holding expense Research & development expense Net income (loss) 0 $0 F

During year 1, Adams Manufacturing Company incurred $118,900,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in year 1. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $40 per unit. Packaging, shipping, and sales commissions are expected to be $19 per unit. Adams expects to sell 2,900,000 batteries before new research renders the battery design technologically obsolete. During year 1, Adams made 432,000 batteries and sold 393,000 of them. Required a. Identify the upstream and downstream costs. b. Determine the year 1 amount of cost of goods sold and the ending inventory balance that would appear on the financial statements that are prepared in accordance with GAAP. c. Determine the sales price assuming that Adams desires to earn a profit margin that is equal to 25 percent of the total cost of developing, making, and…

During year 1, Baird Manufacturing Company Incurred $65,800,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in year 1. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $78 per unit. Packaging, shipping, and sales commissions are expected to be $7 per unit. Baird expects to sell 1,400,000 batteries before new research renders the battery design technologically obsolete. During year 1, Baird made 432,000 batteries and sold 405,000 of them. Required a. Identify the upstream and downstream costs. b. Determine the year 1 amount of cost of goods sold and the ending Inventory balance that would appear on the financial statements that are prepared in accordance with GAAP. c. Determine the sales price assuming that Baird desires to earn a profit margin that is equal to 30 percent of the total cost of developing, making, and…

During Year 2, Fanning Manufacturing Company incurred $147,000,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in Year 2. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $52 per unit. Packaging, shipping, and sales commissions are expected to be $16 per unit. Fanning expects to sell 3,000,000 batteries before new research renders the battery design technologically obsolete. During Year 2, Fanning made 446,000 batteries and sold 400,000 of them. Required a. Identify the upstream and downstream costs. b. Determine the Year 2 amount of cost of goods sold and the ending inventory balance that would appear on the financial statements that are prepared in accordance with GAAP. c. Determine the sales price assuming that Fanning desires to earn a profit margin that is equal to 30 percent of the total cost of developing, making,…

During Year 2, Baird Manufacturing Company incurred $112,500,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in Year 2. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $74 per unit. Packaging, shipping, and sales commissions are expected to be $14 per unit. Baird expects to sell 2,500,000 batteries before new research renders the battery design technologically obsolete. During Year 2, Baird made 448,000 batteries and sold 400,000 of them. Required a. Identify the upstream and downstream costs. b. Determine the Year 2 amount of cost of goods sold and the ending inventory balance that would appear on the financial statements that are prepared in accordance with GAAP. c. Determine the sales price assuming that Baird desires to earn a profit margin that is equal to 25 percent of the total cost of developing, making, and…

Pares

On March 17, Advanced Technologies developed a patent related to laser surgery techniques. They spent $1,200,000 to develop the patent internally, consisting of personnel ($800,000), equipment ($300,000), and materials ($100,000). The company also had the following additional costs: $20,000 in legal fees associated with the purchase and filing of the patent, $35,000 to advertise its new laser surgery techniques, and $45,000 to train employees. What is the recorded cost of the patent?

Spacely Sprockets, Inc. invested $4,996,000 for new manufacturing equipment for its plant in Jetson, NY. The equipment was anticipated to have a useful life of 11 years, or 31,800 machine hours and a residual value of $496,000. In its first year in operation the equipment was used for 2,130 hours and an additional 2,990 hours in its second year of usage.The Income Statement for years 1 and 2 of Spacely Sprockets, Inc. are shown below.All items rounded to nearest whole dollar. Spacely Sprockets, Inc. Year 1 Year 2 Net Sales $34,491,000 $36,106,000 COGS $22,202,000 $22,388,000 Gross Profit $12,289,000 $13,718,000 Operating Expenses(before adding in Depreciation) $7,663,000 $8,113,000 Income from Operations $4,626,000 $5,605,000 Income Tax Expense (at 30%) $1,387,800 $1,681,500 Net Income $3,238,200 $3,923,500   Round all items to the nearest whole dollar and use rounded values for all future calculations.

Spacely Sprockets, Inc. invested $4,995,000 for new manufacturing equipment for its plant in Jetson, NY. The equipment was anticipated to have a useful life of 11 years, or 29,800 machine hours and a residual value of $507,000. In its first year in operation the equipment was used for 2,180 hours and an additional 2,700 hours in its second year of usage.The Income Statement for years 1 and 2 of Spacely Sprockets, Inc. are shown below.All items rounded to nearest whole dollar. Spacely Sprockets, Inc. Year 1 Year 2 Net Sales $35,590,000 $36,164,000 COGS $23,120,000 $22,978,000 Gross Profit $12,470,000 $13,186,000 Operating Expenses(before adding in Depreciation) $7,650,000 $8,152,000 Income from Operations $4,820,000 $5,034,000 Income Tax Expense (at 30%) $1,446,000 $1,510,200 Net Income $3,374,000 $3,523,800   Round all items to the nearest whole dollar and use rounded values for all future calculations.1. Calculate the depreciation expense for year 1 and 2 using…

On March 1, Bartholomew Company purchased a new stamping machine with a list price of $88,000. The company paid cash for the machine; therefore, it was allowed a 5% discount. Other costs associated with the machine were: transportation costs, $3100; sales tax paid, $6,720, installation costs, $1,900; routine maintenance during the first month of operation, $3,000. The cost recorded for the machine was:

In 2014, Xenex Market Services began development of a customer management software package for their own internal use and incurred $40,000 costs related to conceptual formulation of design alternatives. In 2015, management agreed to fully fund development of the software and spent $120,000 in development costs. In 2016, development was completed after incurring an additional $160,000 in development costs plus another $ 60,000 was spent on training costs for using the software. In 2017, the company started using the software and began amortizing related costs over a 10-year expected useful life. What is the amount of amortization expense for 2017 for this internally-developed software? $32,000 $28,000 $34,000 $38,000

DJ Builders Company began operations on January 1, 2008. During the year, DJ Builders Company entered into a contract with Joey Company to construct a manufacturing facility. At that time, DJ Builders estimated that it would take five years to complete the facility at a total cost of P 4,800,000. The contract price for construction of the facility is P 5,800,000. During 2008, DJ Builders incurred P 1,250,000 in construction costs related to the project because of rising material and labor costs, the estimated cost to complete the contract at the end of 2008 is P 3,750,000. Joey Company was billed for and paid 30% of the contract price in accordance with the contract agreement. It is further agreed, that any costs incurred is expected to be recoverable. Compute the amount of construction in progress (net) – due from customers or progress billings (net) – due to customers:             (Zero profit approach)                                                   Percentage of Completion…

Western Wholesale Foods incurs the following expenditures during the current fiscal year. Required: How should Western account for each of these expenditures? 1. Salaries for the repair technicians, $147,000 2. Remodeling of the executive offices, $81,600 3. Annual maintenance costs related to its machinery, $73,400 4. Improvement of the production line resulting in an increase in productivity, $31,000 5. Addition of a sprinkler system to the manufacturing facility to reduce the risk of fire damage, $44,700

On January 1, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value. Management estimates the machine will produce 1,470,000 units of product during its life. Actual production of units is as follows: 355,600 in Year 1, 320,400 in Year 2, 317,000 in Year 3, 343,600 in Year 4, and 138,500 in Year 5. The total number of units produced by the end of Year 5 exceeds the original estimate—this difference was not predicted. Note: The machine cannot be depreciated below its estimated salvage value. Required:  Prepare a table  Units-of-production: Year Number of Units  Depreciation per Unit   Depreciation Expense  1       2       3       4       5       Totals       Double-declining-balance:                 Year Beginning Book Value Annual Depreciation (40% of book value) Accumulated Depreciation at Year-End Ending Book Value ($324,000 Cost less Accumulated Depreciation) 1         2…

Charles Corp. purchased a new machine for its factory. The following lists shows the various expenditures for the machine during its first year: Base purchase price, $40,000 Sales tax incurred at the time of purchase, $3,000 Installation charges for the machine, $1,000 Insurance costs incurred while the machine was being shipped, $900 Insurance costs for the first year of the machine's service life, $500 Ordinary repairs and maintenance costs during the first year of the machine's service life, $1,200 Question: What should be the capitalized cost of the machine? Answer: $ Answer

A consumer electronics company was formed to develop cell phones that run on or are recharged by fuel cells. The company purchased a warehouse and converted it into a manufacturing plant for $8,000,000. It completed installation of assembly equipment worth $1,700,000 on December 31st. The plant began operation on January 1st. The company had a gross income of $8,600,000 for the calendar year. Manufacturing costs and all operating expenses, excluding the capital expenditures, were $2,170,000. The depreciation expenses for capital expenditures amounted to $465,000. The corporate tax rate is 21%. (a) Compute the taxable income of this company. The taxable income of this company is $ (Round to the nearest dollar.)

A consumer electronics company was formed to develop cell phones that run on or are recharged by fuel cells. The company purchased a warehouse and converted it into a manufacturing plant for $8,000,000. It completed installation of assembly equipment worth $1,700,000 on December 31st. The plant began operation on January 1st. The company had a gross income of $8,600,000 for the calendar year. Manufacturing costs and all operating expenses, excluding the capital expenditures, were $2,170,000. The depreciation expenses for capital expenditures amounted to $465,000. The corporate tax rate is 21%. (a) Compute the taxable income of this company. The taxable income of this company is $ 5965000. (Round to the nearest dollar.) (b) How much will the company pay in federal income taxes for the year? The federal income taxes for the year will be $ (Round to the nearest dollar.)

Western Wholesale Foods incurs the following expenditures during the current fiscal year. How should Western account for each of these expenditures? 1. Salaries for the repair technicians, $145,000 2. Remodeling of the executive offices, $85,900 3. Annual maintenance costs related to its machinery, $75,500 4. Improvement of the production line resulting in an increase in productivity, $39,200 5. Addition of a sprinkler system to the manufacturing facility to reduce the risk of fire damage, $43,400

On January 2, Gannon Co. purchases and installs a new machine costing $312,000 with a five-year life and an estimated $28,000 salvage value.  Management estimates the machine will produce 1,136,000 units of product during its life.  Actual production of units is as follows:  year 1:  245,600; year 2: 230,400; year 3: 227,000; year 4: 232,600; and year 5:  211,200.  The total number of units produced by the end of year 5 exceeds the original estimate – this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.) Compute depreciation for each year (and total depreciation for all years combined) for the machine under straight-line and units-of-production depreciation methods. You will use the form for Problem 9 and then upload the form to this problem. Note:  You do not have to use the area for calculating the units of production.  This is just a work area.  If you do use it, make sure that your final answers are put into the table with…

On January 2, Gannon Co. purchases and installs a new machine costing $312,000 with a five-year life and an estimated $28,000 salvage value.  Management estimates the machine will produce 1,136,000 units of product during its life.  Actual production of units is as follows:  year 1:  245,600; year 2: 230,400; year 3: 227,000; year 4: 232,600; and year 5:  211,200.  The total number of units produced by the end of year 5 exceeds the original estimate – this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.) Compute depreciation for each year (and total depreciation for all years combined) for the machine under straight-line and units-of-production depreciation methods. You will use the form for Problem 9 and then upload the form to this problem. Note:  You do not have to use the area for calculating the units of production.  This is just a work area.  If you do use it, make sure that your final answers are put into the table with…

Star Construction Corporation has a contract to construct a building for $10,950,000. The building is controlled by the customer throughout the term of the contract. Total costs to complete the building were originally estimated at $8,850,000. Construction commenced on 4 February 20×5. Actual costs were in line with estimated costs for 20×5 and 20×6. In 20×7, actual costs exceeded estimated costs by $150,000. Total construction costs incurred in each year were as follows: 20X5: $2,700,00020X6: $4,500,00020X7: $1,800,000 Progress billings based on the amount of work completed were collected each year. Star Construction uses the percentage-of-completion method. The percentage-of-completion is based on costs incurred compared with estimated total costs of the project. Company also billed the client and collected the following payments Year Billings Payments Received 20X5: $2,300,000 $2,100,000 20X6: $4,900,000 $4,700,000 20X7: $3,750,000 $4,150,000…

1. During the current year, Dangerous company incurred the following costs:Research and development services performed by anotherentity for Luminous 300,000Design, construction and testing of preproduction prototypeAnd model 400,000Testing in search for new product or process alternative 350,000 What total amount should be reported as research and development expense in thecurrent year?