ames owns a framing business, Frames-4-U, that frames artworks, prints and photos for clients. He purchased equipment for R100 000 with the intention of using it to assist him to frame the art of his clients. The expected useful life of the equipment is five years. The supplier of the equipment is in Johannesburg, and James had to pay for transport rom the supplier to his workshop in Cape Town. This cost R5 000. The workers had to offload the equipment and carry it to the correct location in the workshop and James pai hem R500 for this task. You are required to a. Explain to James what type of asset the equipment will be classified in the accounting records of Frames-4-U. In your answer you should also give the definition of the classification of the asset. (...) b. Calculate the total cost of the equipment he should use to debit the equipment account. Give a reason to explain to James why you calculated the cost is this manner.

ames owns a framing business, Frames-4-U, that frames artworks, prints and photos for clients. He purchased equipment for R100 000 with the intention of using it to assist him to frame the art of his clients. The expected useful life of the equipment is five years. The supplier of the equipment is in Johannesburg, and James had to pay for transport rom the supplier to his workshop in Cape Town. This cost R5 000. The workers had to offload the equipment and carry it to the correct location in the workshop and James pai hem R500 for this task. You are required to a. Explain to James what type of asset the equipment will be classified in the accounting records of Frames-4-U. In your answer you should also give the definition of the classification of the asset. (...) b. Calculate the total cost of the equipment he should use to debit the equipment account. Give a reason to explain to James why you calculated the cost is this manner.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

At Frank's Nursery a proposed project with a cost of $3,000,000 hasa calculated NPV of $101.50. Based on this what should the company do with the proposed project? Reject the project Accept the project Nothing can be determined since the payback period is not known
Adebola deliver service uses two delivery vans. Her business policy is to replace the vans every 4 years. One of the vans which was bought 4-years ago at a cost of £12,750, is due for replacement. Adebola depreciates the vans using the reducing balance methods at a rate of 25% per annum. She accepts an offer of £3,650 for the van. What is Adebola’s profit or loss on the sale of the Van after year 4?
Mr. Don is the director of A-Design Inc., a federally incorporated company in Canada, specializing in the design and manufacturing of armrests for the wheelchair industry.A-Design invested $100,000 in aproduction machine, which has auseful life of 10 years, and put $10,000 in its bank account. In an attempt to improve company sales and profits, Mr. Don planned tooffer two purchasing options to the clients of his company Option 1:$250 deposit upfront$500 yearly fee for 5 years Option 2:$1300 deposit upfront$300 yearly fee for 3 years Assuming an interest rate of 5% per year over a period of 5 years on the moneyput in the bank, how much will A-Design have in its bank account at the end of thefirst year?
David and Rita Richardson saved all their married life to open a homestay named T-Lights. They invested RM100,000 of their own money and the corporation issued common stock to them. The business then got a RM100,000 bank loan for the RM200,000 needed to get started. The corporation bought a run-down old colonial home in Ipoh for RM80,000. It cost another RM50,000 to renovate. They found most of the furniture at antique shops and flea markets – total cost was RM20,000. Kitchen equipment cost RM10,000, and a Dell computer set cost RM2,000. Prior to the grand opening, the banker requests a report on their activities thus far. T-Lights’ bank statement shows a cash balance of RM38,000. They feel pretty good with that much net income in only six months. To better understand how well they are doing, they prepare the following statement for presentation to the bank: T-Lights Income Statement Six Months Ended 30 June 2020 Revenues: Investment by owner Bank loan RM100,000 100,000…
On January 1, Celebrity Allures Inc. bought a new popcorn popper for one of their movie theaters. The popper cost $6,000. The expected life is 5 years with a salvage value of $500. The popper is expected to produce 50,000 buckets of popcorn over its life. In the first year, the popper produced 9,000 buckets of popcorn. In the second year, the popper produced 12,000 buckets of popcorn. What is the accumulated depreciation after the second year on the popcorn popper assuming double declining balance depreciation? $2,200 $3,840 $1,440 $2,400