10One of the employees of Davenport Corporation recently was involved in an accident with oneof the corporation's delivery vans. The corporation is either going to repair the damaged vanor sell it as is and buy a comparable used van. Information related to this decision is providedbelow:$30,000Initial cost of the damaged vanAccumulated depreciation to date on van $18,000Salvage value of van immediately before crash $9,000Salvage value of van immediately after crashCost to repair damaged vanCost of a comparable used vanBased on the information above, identify whether Davenport would be financially repairing thedamaged van, or buying the comparable used van? Explain why?$1,000$5,000$10,000

Sunk Cost: Sunk costs are those which have already been incurred and which are unrecoverable. In…

Answered: 10 One of the employees of Davenport…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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17. On January 1, 2015, Battle Company purchased a delivery truck for $252,000 with an estimated useful life of 140,000 miles and zero salvage value. The truck is being depreciated using the units-of-production method. The truck was driven 16,000 miles in 2015 and 20,000 miles in 2016. On January 1, 2017, an improvement was made to the truck that increased its total useful life to 160,000 miles and increased its salvage value to $1,400. The improvement cost $56,000. The firm reported $111,600 of accumulated depreciation on this truck at December 31, 2017. How many miles were driven in 2017?
11. Gingerbread Corp had been depreciating a delivery truck for 3 years when it decided to sell the truck. The historical cost of the delivery truck was $40,000 with an estimated salvage value of $5,000 and a useful life of 7 years. The company had recorded $7,000 of depreciation expense every year for three years. The company sold the truck for $21,000. What is the gain or loss recorded on the sale of the truck. a.Loss of $4,000 b.Gain of $2,000 c.Gain of $4,000 d.Loss of $2,000
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17. Capital Company has decided to discontinue a product produced on a machine purchased 4 years ago at a cost of P70,000. The machine has a current book value of P30,000. Due to technologically improved machinery now available in the marketplace the existing machine has no current salvage value. The company is reviewing the various aspects involved in the production of a new product. The engineering staff advised that the existing machine can be used to produce the new product. Other costs involved in the production of the new product will be materials of P20,000 and labor priced at P5,000. Ignoring income taxes, the costs relevant to the decision to produce or not to produce the new product would be * Ph 25,000 Ph 55,000 Ph 30,000 O Ph 95,000
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14. A company purchased a 10 - ton draw press at a cost of $187,000 with terms of 2/15, n 45. Payment was made within the discount period. Shipping costs were $3,800, which included $320 for insurance in transit. Installation costs totaled $12,900, which included $ 4,600 for taking out a section of a wall and rebuilding it because the press was too large for the doorway. The capitalized cost of the 10 - ton draw press is:
Blossom Inc. recently replaced a piece of automatic equipment at a net price of $3,500, f.o.b. factory. The replacement was necessary because one of Blossom’s employees had accidentally backed his truck into Blossom’s original equipment and made it inoperable. Because of the accident, the equipment had no resale value to anyone and had to be scrapped. Blossom’s insurance policy provided for a replacement of its equipment and paid the price of the new equipment directly to the new equipment manufacturer, minus the deductible amount paid to the manufacturer by Blossom. The $3,500 that Blossom paid was the amount of the deductible that it has to pay on any single claim on its insurance policy. The new equipment represents the same value in use to Blossom. The used equipment had originally cost $64,000. It had a book value of $45,000 at the time of the accident and a second-hand market value of $50,000 before the accident, based on recent transactions involving similar equipment. Freight…
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