Exercise 8-4A (Algo) Determining the cost of an asset LO 8-1 Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $122,110. The seller agreed to allow a 4.50 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point Freight cost amounted to $2,750. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $760. The loader operator is paid an annual salary of $39,720. The cost of the company's theft insurance policy increased by $1,700 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $12,200. Required a. Determine the amount to be capitalized in an asset account for the purchase of the loader. b. Record the purchase in general journal format. Complete this question by entering your answers in the tabs below. Required A Required B Determine the amount to be capitalized in an asset account for the purchase of the loader. (Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign.)

Exercise 8-4A (Algo) Determining the cost of an asset LO 8-1 Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $122,110. The seller agreed to allow a 4.50 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point Freight cost amounted to $2,750. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $760. The loader operator is paid an annual salary of $39,720. The cost of the company's theft insurance policy increased by $1,700 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $12,200. Required a. Determine the amount to be capitalized in an asset account for the purchase of the loader. b. Record the purchase in general journal format. Complete this question by entering your answers in the tabs below. Required A Required B Determine the amount to be capitalized in an asset account for the purchase of the loader. (Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign.)

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter2: Asset And Liability Valuation And Income Recognition

Section: Chapter Questions

Problem 5QE

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A Cost of a Fixed Asset Mist City Car Wash purchased a new brushless car-washing machine for one of its bays. The machine cost $41,700. Mist City borrowed the purchase price from its bank on a 1-year, 8% note payable. Mist City paid $975 to have the machine transported to its place of business and an additional $200 in shipping insurance. Mist City incurred the following costs as a part of the installation: During the testing process, one of the motors became defective when soap and water entered the motor because its cover had not been installed properly by Mist Citys employees. The motor was replaced at a cost of $640. Required: 1. Compute the cost of the car-washing machine. 2. CONCEPTUAL CONNECTION Explain why any costs were excluded from the cost of the machine.
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8 Fixed and Intangible Assets APPLY WHAT YOU HAVE LEARNED 8-1. Acquisition of assets. he following asset, identify the costs of the asset. For any costs incurred that are no included in the asset cost, specify how they would be recorded. rowth Company purchased a new machine for its manufacturing facility. Costs Incurred in conjunction with this purchase included the following: $90,000, subject to 2/10, n/30 discount 5,400 6,000 1,900 Invoice price Sales tax Freight to ship to Growth Transport to factory Repair of chip in machine from damage in loading Training of operators Lunch for truck driver in transit 500 3,600 25 Make the journal entry to record the incurrence of these costs. Be sure to show calculations for combined amounts. You may credit Cash for the total.
Exercise 6-17A (Algo) Asset replacement-opportunity cost LO 6-5 Thornton Freight Company owns a truck that cost $36,000. Currently, the truck's book value is $27,000, and its expected remaining useful life is five years. Thornton has the opportunity to purchase for $26,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,000 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $18,000. Required Calculate the total relevant costs. Should Thornton replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Answer is not complete. Keep Old Total relevant costs Should Thornton replace or continue the old truck? Return to question Replace With New Replace the old truck.
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Problem 1 Knight Company purchased an equipment for P369,600 to be used in the construction of MRT-3. The company had to pay the following in relation to the equipment: Import duties P10,000 Non-refundable taxes 15,000 Shipping costs Cost of testing 2,000 1,200 Installation costs 1,800 Other information: • The company is required to dismantle the equipment at the end of its useful life. The company estimates the dismantling costs to be P50,000. The relevant discount rate is 10%. • The equipment has a useful life of 5 years. How much is the initial cost of the equipment? • The purchase price includes input vat of P39 600 How much is the initial cost of the asset?
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AI Maha Company purchased equipment and had the following costs: Repairing of roof RO 14,750 Insurance during transit 570 Sales taxes 2,870 Cash price 25,250 New parking lot 23,000 Property taxes 4,500 Installation and testing 960 Al Maha will record the acquisition cost of the equipment as: Select one: O a. RO 34,150. O b. None of the answers are correct O c RO 67,850. O d. RO 29,620. O e. RO 44,850.
MODULE 5 8-7 DISPOSAL OF ASSET Please read the problem below and provide the correct answer along with an explanation of the answer. Thank you! Dump It is selling a machine that no longer is large enough for the production requirements. Dump It has had the machien for 3 years and has depreicated it using the straightline method. Original cost had been $98,000 and salvage was estimated at $6000. The machine has a life of 8 years. a) Journalize the sale of the imagine $70,000 b) Journalize teh sale of the machine for $50,000