ABC Ltd. Incurred the following costs related to the purchase of a machine: Invoice price Insurance during transit Pouring cement slab on which the machine must be mounted Interest expense on debt used to buy the asset Shipping costs Annual service contract cost $14,600 60 $12,100 $11,800 $10,500 What is the amount capitalized to the balance sheet for the machine? $13,600 200 1,000 2,500 100 300

ABC Ltd. Incurred the following costs related to the purchase of a machine: Invoice price Insurance during transit Pouring cement slab on which the machine must be mounted Interest expense on debt used to buy the asset Shipping costs Annual service contract cost $14,600 60 $12,100 $11,800 $10,500 What is the amount capitalized to the balance sheet for the machine? $13,600 200 1,000 2,500 100 300

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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Situation II During 2022, Pearl SA constructed and manufactured certain assets and incurred the following borrowing costs in connecti with those activities. Warehouse constructed for Pearl's own use Special-order machine for sale to unrelated customer, produced according to customer's specifications Inventories routinely manufactured, produced on a repetitive basis Borrowing Costs Incurred The total amount of borrowing cost to be capitalized R$ R$28,200 8,460 7,520 All of these assets required an extended period of time for completion. Assuming the effect of borrowing cost capitalization is material, what is the total amount of borrowing cost to be capitalized?
On January 1, 2021, Fatema & Company purchased a machine for use in its production process. The cash price of the machine was Tk. 600,000. Related expenditures included: value added tax Tk. 50,000, shipping costs Tk. 10,000, insurance during shipping Tk. 18,000, installation and testing costs Tk. 25,000, Go-down rent Tk. 5,000 and Tk. 10,000 of oil and lubricants to be used with the machinery during its first year of operation. The company estimates that the useful life of the machine is 4 years with a Tk. 5,000 salvage value remaining at the end of that time period
. On November 15, 2021, Trade Company made payments for the following expenditures: Replacement parts for overhaul of machine 550,000 Labor and overhead in connection with overhaul 140,000 Continuing, frequent and low cost repairs 150,000 Replacement of broken gear of machine 50,000 1. The overhaul resulted in a significant increase in production. 2. the journal entry to record the expenditure to be capitalized would be
Determining Cost of Land On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $44,000 in cash and giving a short-term note for $250,000. Legal fees paid were $2,440, delinquent taxes assumed were $10,900, and fees paid to remove an old building from the land were $22,800. Materials salvaged from the demolition of the building were sold for $4,400. A contractor was paid $893,800 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet. X Feedback Check My Work Costs incurred to ready the asset for use are added to the asset account. Materials salvaged and sold during the process reduce the cost of the land.
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:
Midnight, Inc. incurred the following costs related to equipment purchased on January 1, 2022: • Purchased equipment for $80,000, terms 2/ 10, net 30. Paid for the equipment on January 5, 2022. • Had the equipment installed and paid the installer $5,000. • Paid the freight bill for the truck that delivered the equipment for $800. • Advertised a new product that will be produced by the new equipment, $1,900. • Sales taxes paid on the equipment amounted to $6,000. • During installation, a part was broken off and had to be replaced for $2,700. • Midnight believes the machine will be useful for 5 years, at which time it will be sold for $5,000. Assuming Midnight, Inc. uses the straight-line method of depreciation, what will depreciation expense on its 2023 income statement be? Select one: a. $35,330 b. $17,580 c. $19,170 d. $34,720 e. $17,040
Pina Company purchased equipment and incurred these costs: Cash price Sales taxes Insurance during transit Annual maintenance costs Total costs $25800 O $27090 O $27930 O $25800 O $27480 1290 390 450 $27930 What amount should be recorded as the cost of the equipment?
How to calculate the Amortization Expense?
Rain Company traded a manual weather machine for an automated weather machine and gave $40,000 cash. The manual machine cost $495,000, had a net book value of $350,000, and a fair value of $360,000. The automated machine was originally purchased by Shine Company for $510,000 and had a net book value of $430,000. It has a fair market value of $450,000. Determine the value of the asset received for Rain and Shine assuming the exchange does not have commercial substance. Please include the appropriate dollar sign and commas (example $25,000).
Peace Co. purchased land as a factory site for P300,000. Peace paid P30,000 to tear down two building on the land. Salvage was sold for P2,700. Legal fees of P1,740 were paid for title investigation and making the purchase. Architect's fees were P15,600. Land Title insurance cost P1,200. Liability insurance during construction cost, P1300. Excavation cost P5,220. The contractor was paid P1,100,000. An assessment made by the city for pavement was P3,200. Interest costs during construction were P85,000. The cost of the land is The cost of the building is a. 1,201,900b. 1,207,120c. 1,234,420d. none of these
White purchased land with a current market value of $144,000, a building with a market value of $18,000, and equipment with a market value of $18,000. Journalize the lump-sum purchase of the three assets purchased for a total cost of $170,000 in exchange for a note payable. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Date Accounts Debit Credit Land Building Equipment Notes payable