4. Interest cost qualifying for capitalization in 2025 was charged to interest expense in 2025. 5. In 2025 land was bought for an employee parking lot. The $2,000 title search fee was charged to expense in 2025. 6. The cost of moving several manufacturing facilities from metropolitan locations to suburban areas in 2025 was capitalized. The cost was written off over a 10-year period beginning in 2025. During 2025 and 2026, Sawyer Corporation experienced several transactions involving plant assets. A number of errors were made in recording some of these transactions. For each item listed below, indicate the effect of the error (if any) in the blanks provided by using the appropriate terms. If no error was made, choose No Effect in each of the four columns. Transaction 1. The cost of installing a new computer system in 2025 was not recorded in 2025. It was charged to expense in 2026. 2. In 2026, clerical workers were trained to use the new computer system at a cost of $15,000, which was erroneously capitalized. The cost is to be written off over the expected life of the new computer system. 3. A major overhaul of factory machinery in 2025, which extended its useful life by 5 years, was charged to accumulated depreciation in 2025. 2025 2026 Net Book Value of Plant Assets at 12/31/25 2025 Net Income Net Book Value of Plant Assets at 12/31/26 2026 Net Income
4. Interest cost qualifying for capitalization in 2025 was charged to interest expense in 2025. 5. In 2025 land was bought for an employee parking lot. The $2,000 title search fee was charged to expense in 2025. 6. The cost of moving several manufacturing facilities from metropolitan locations to suburban areas in 2025 was capitalized. The cost was written off over a 10-year period beginning in 2025. During 2025 and 2026, Sawyer Corporation experienced several transactions involving plant assets. A number of errors were made in recording some of these transactions. For each item listed below, indicate the effect of the error (if any) in the blanks provided by using the appropriate terms. If no error was made, choose No Effect in each of the four columns. Transaction 1. The cost of installing a new computer system in 2025 was not recorded in 2025. It was charged to expense in 2026. 2. In 2026, clerical workers were trained to use the new computer system at a cost of $15,000, which was erroneously capitalized. The cost is to be written off over the expected life of the new computer system. 3. A major overhaul of factory machinery in 2025, which extended its useful life by 5 years, was charged to accumulated depreciation in 2025. 2025 2026 Net Book Value of Plant Assets at 12/31/25 2025 Net Income Net Book Value of Plant Assets at 12/31/26 2026 Net Income
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 15E: The following are independent errors: a. In January 2019, repair costs of 9,000 were debited to the...
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Drop down boxes options are: Overstate, Understate & No effect
Transcribed Image Text:4. Interest cost
qualifying for
capitalization in 2025
was charged to
interest expense in
2025.
5. In 2025 land was
bought for an
employee parking lot.
The $2,000 title
search fee was
charged to expense in
2025.
6. The cost of moving
several manufacturing
facilities from
metropolitan
locations to suburban
areas in 2025 was
capitalized. The cost
was written off over a
10-year period
beginning in 2025.
Transcribed Image Text:During 2025 and 2026, Sawyer Corporation experienced several transactions involving plant assets. A number of errors were made in
recording some of these transactions. For each item listed below, indicate the effect of the error (if any) in the blanks provided by using
the appropriate terms.
If no error was made, choose No Effect in each of the four columns.
Transaction
1. The cost of installing a
new computer system
in 2025 was not
recorded in 2025. It
was charged to
expense in 2026.
2. In 2026, clerical
workers were trained
to use the new
computer system at a
cost of $15,000, which
was erroneously
capitalized. The cost is
to be written off over
the expected life of
the new computer
system.
3. A major overhaul of
factory machinery in
2025, which extended
its useful life by 5
years, was charged to
accumulated
depreciation in 2025.
2025
2026
Net Book Value of
Plant Assets at 12/31/25
2025 Net Income
Net Book Value of
Plant Assets at 12/31/26
2026 Net Income
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