Acquisition Cost On January 1, 2017, Ruby Company purchased a piece of equipment with a list price of $60,000. The following amounts were related to the equipment purchase Terms of the purchase were 2/10, net 30. Ruby paid for the purchase on January 8 Freight costs of $1,000 were incurred A state agency required that a pollution control device be installed on the equipment at a cost of $2,500. During installation, the equipment was damaged and repair costs of $4,000 were incurred. Architect's fees of $6,000 were paid to redesign the work space to accommodate the new equipment. Ruby purchased liability insurance to cover possible damage to the asset. The three-year policy cost $8,000. Ruby financed the purchase with a bank loan. Interest of $3,000 was paid on the loan during 2016. Required: Determine the acquisition cost of the equipment.

Acquisition Cost On January 1, 2017, Ruby Company purchased a piece of equipment with a list price of $60,000. The following amounts were related to the equipment purchase Terms of the purchase were 2/10, net 30. Ruby paid for the purchase on January 8 Freight costs of $1,000 were incurred A state agency required that a pollution control device be installed on the equipment at a cost of $2,500. During installation, the equipment was damaged and repair costs of $4,000 were incurred. Architect's fees of $6,000 were paid to redesign the work space to accommodate the new equipment. Ruby purchased liability insurance to cover possible damage to the asset. The three-year policy cost $8,000. Ruby financed the purchase with a bank loan. Interest of $3,000 was paid on the loan during 2016. Required: Determine the acquisition cost of the equipment.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.1E

See similar textbooks

Similar questions

Comprehensive: 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?
On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.
On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000
Acquisition Cost On January 1, 2017, Zircon Enterprises purchased a piece of equipment with a list price of $60,000. The following amounts were related to the equipment purchase: Terms of the purchase were 2/10, net 30. Zircon paid for the purchase on January 8. Freight costs of $1,000 were incurred. A state agency required that a pollution control device be installed on the equipment at a cost of $2,500. During installation, the equipment was damaged and repair costs of $4,000 were incurred. Architect's fees of $4,500 were paid to redesign the work space to accommodate the new equipment. Zircon purchased liability insurance to cover possible damage to the asset. The three-year policy cost $8,000. Zircon financed the purchase with a bank loan. Interest of $3,000 was paid on the loan during 2016. Required: Determine the acquisition cost of the equipment.
On January 1, 2017, Zircon Enterprises purchased a piece of equipment with a list price of $60,000. The following amounts were related to the equipment purchase: Terms of the purchase were 2/10, net 30. Zircon paid for the purchase on January 8. Freight costs of $1,000 were incurred. A state agency required that a pollution control device be installed on the equipment at a cost of $2,500. During installation, the equipment was damaged and repair costs of $4,000 were incurred. Architect's fees of $4,800 were paid to redesign the work space to accommodate the new equipment. Zircon purchased liability insurance to cover possible damage to the asset. The three-year policy cost $8,000. Zircon financed the purchase with a bank loan. Interest of $3,000 was paid on the loan during 2016. Required: Determine the acquisition cost of the equipment.
Sandhill company owns equipment that cost $120,000 when purchased on January 1, 2018. It has been depreciated using the straight line method based on estimated salvage value of $16,500 and an estimated useful life of 5 years. Prepare sandhill company's journal entries to record the sale of the equipment in these four independent situations. Sold for $59,000 on Jan 1, 2021 Sold for $59,000 on May 1, 2021 Sold for $38,500 on Jan 1, 2021 Sold for $38,500 on October 1, 2021
On January 2, 2016, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $30,625. The expenditures made to acquire the asset were as follows: Purchase price $154,000 Freight charges 2,000 Installation charges 4,000 Jackson’s policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment’s life and then switch to straight line halfway through the equipment’s life. Required: 1. Calculate depreciation for each year of the asset’s eight-year life. 2. Discuss the accounting treatment of the depreciation on the equipment.
Easy-going company acquired some Plant at a cost of $1.5million. As at 30 June 2014 the plant had accumulated depreciation of $250 000. On 30 June 2014 it was determined that the plant could be sold for a price of $800 000 and the costs associated with making the sale would be $40 000. The value in use is 738,000. Required: Determine whether an impairment loss needs to be recognized in relation to the machinery and, if so, provide the appropriate journal entry. Note: Provide all the calculations/working out. do not just write the answer.
Computing Impairment of Intangible Assets Stiller Company had the following information for its three intangible assets. 1. Patent: A patent was purchased for $180,000 on June 30, 2018. Stiller estimated the useful life of the patent to be 15 years. On December 31, 2020, the estimated future cash flows attributed to the patent were $153,000. The fair value of the patent was $135,000. 2. Trademark: A trademark was purchased for $9,000 on August 31, 2019. The trademark is considered to have an indefinite life. The fair value of the trademark on December 31, 2020, is $4,500. 3. Goodwill: Stiller recorded goodwill in January 2019, related to a purchase of another company. The carrying value of goodwill is $54,000 on December 31, 2020. On December 31, 2020, the segment for which the goodwill relates had a fair value of $1,044,000. The book value of the net assets of the segment (including goodwill) is $1,080,000. Note: Round each of your answers to the nearest whole dollar. a. Classify each…
On January 1, 2017, Salina Company purchased land and a building for $2,240,000. At the time of the purchase, it was estimated that the building had a market value of $1,400,000. On January 5, Salina installed a fence around the property at a cost of $14,000. Given this information, the entry to record the cost of the fence would include a a.Debit to Fence Expense for $14,000. b.Debit to Land for $14,000. c.Credit to Land for $14,000. d.Debit to Land Improvements for $14,000.
Acquisition of Equipment - A machine cost $1,200,000, has annual depreciation of $200,000, and has accumulated depreciation of $850,000 on December 31, 2017. On April 1, 2018, when the machine has a fair value of $275,000, it is exchanged for a machine with a fair value of $1,350,000 and the proper amount of cash is paid. The exchange had commercial substance. Required: Prepare the entry to record the acquisition of the new equipment.
On January 1, 2015, Guiamalon Company reported the following account balances relating to property, plant, and equipment: Land 2,000,000 Building 15,000,000 Accumulated Depreciation 3,750,000 Machinery 3,000,000 Accumulated Depreciation 1,500,000 Assets have been carried at cost since acquisition. All assets were acquired on January 1, 2009. The straight line method is used. On January 1, 2015, the entity decided to revalue the property, plant, and equipment. On such date, competent appraisers