in the new building?40. In January, Prahbu purchased for $90,000 a new machine for use in an existingproduction line of his manufacturing business. Assume that the machine is a unit ofproperty and is not a material or supply. Prahbu pays $2,500 to install the machine,and after the machine is installed, he pays $1,300 to perform a critical test on themachine to ensure that it will operate in accordance with quality standards. OnNovember 1, the critical test is complete, and Prahbu places the machine in serviceon the production line. On December 3, Prahbu pays another $3,300 to performperiodic quality control testing after the machine is placed in service. How muchwill Prahbu be required to capitalize as the cost of the machine?Donn11LO 2-1resear

Assets are resources that a business owns or controls with the expectation that they will provide…

Answered: 40. In January, Prahbu purchased for…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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CH Kilo Inc. is evaluating a proposal to supply warehouse space to a potential customer as well as maintain all the required warehouse records. Kilo has a storage barn not currently in use; however, it will require the installation of additional shelving and a special concrete pad for delivery truck access Kilo's existing accountant will assume the additional accounting duties and receive an additional $8,000 per annum. The potential customer will pay a fee to Kilo based on the volume of product stored. Required: Which of the following items is not a relevant consideration in deciding whether Kilo should provide the warehouse space to the potential customer? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer, Any boxes left with a question mark will be automatically graded as incorrect.) Original purchase price of the storegeben…
Omni-Resistor, Incorporated specializes in waterproofing homes, office buildings and other structures. Recently it completed a waterproofing renovation for a building at a local university. The contract specifies that Omni-Resistor will receive a flat lump sum of $101,000 for the renovation, and an additional $2,600 if there is no water leaking through the roof within the first year after the renovation. The seller estimates that there is an 80% chance that no leakage will occur within the first year. Required: (a) Assuming Omni-Resistor uses the most likely value to estimate the variable consideration, calculate the transaction price. (b) Assuming Omni-Resistor determines transaction price as the “expected value” of the variable consideration, calculate the transaction price. (c) Assume Omni-Resistor uses the “expected value” approach, but is very uncertain of that estimate due to a lack of experience with similar renovations. Calculate the transaction price.
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12. On July 23 of the current year, Dakota Mining Company pays $7,398,720 for land estimated to contain 8,808,000 tons of recoverable ore. It installs and pays for machinery costing $968,880 on July 25. The company removes and sells 451,000 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined. Required:Prepare entries to record the following.(a) The purchase of the land.(b) The cost and installation of machinery.(c) The first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.(d) The first five months' depreciation on the machinery.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
In January, Prahbu purchased for $100,000 a new machine for use in an existing production line of his manufacturing business. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $4,075 to install the machine, and after the machine is installed, he pays $2,350 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $5,400 to perform periodic quality control testing after the machine is placed in service. How much will Prahbu be required to capitalize as the cost of the machine?
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Hart Corporation is a chemical company that produces cleaning fluids of different types. It is the main employer in a small town. Stan Hart has been the company president for 15 years and is paid a salary plus a 10% bonus based on pretax income; he is also the major shareholder. After treatment to remove pollutants, Hart has been draining the waste water from its production process into a nearby river for many years. Over the past year (2019), there have been several “fish kills” in the river. At the end of 2019, the Environmental Protection Agency (EPA) filed a $1 million lawsuit against Hart for violation of pollution control laws. You are an accountant for the firm that is auditing Hart’s 2019 financial statements. Preliminary calculations show that Hart earned a pretax income of $600,000 for 2019, before considering the effects of the lawsuit. In a discussion with Stan Hart and Bob Brandt, the company’s attorney, you raise the issue of whether or not to report the lawsuit in the…

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