Hoot Enterprises buys a warehouse for $590,000 to use for its East Coast distributionoperations. On the date of the purchase, a professional appraisal shows a value of $650,000for the warehouse. The seller had originally purchased the building for $480,000. Hoothas a similar warehouse on the West Coast that has a book value of $603,000. Under thehistorical cost principle, Hoot should record the building fora. $650,000.b. $480,000.c. $590,000.d. $603,000.

Hoot Enterprises buys a warehouse for $590,000 to use for its East Coast distributionoperations. On the date of the purchase, a professional appraisal shows a value of $650,000for the warehouse. The seller had originally purchased the building for $480,000. Hoothas a similar warehouse on the West Coast that has a book value of $603,000. Under thehistorical cost principle, Hoot should record the building fora. $650,000.b. $480,000.c. $590,000.d. $603,000.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 53P

See similar textbooks

Similar questions

Raymond Stamping Services purchased a stamping machine priced at $21,500. The firm had to pay a sales tax of $1,200 on this purchase. Raymond also paid the inbound transportation charges of $525 on the new machine, as well as a labor cost of $1,350 to install the machine in the factory. In addition, Raymond had to prepare the site before installation at a cost of $2,125. Determine the cost basis for the new machine for depreciation purposes.
Subasta Corporation was able to acquire second hand goods worth P100,000 in an auction. The goods can be sold as is for P120,000 or reconditioned at a cost of P30,000 and sold for P170,000. 1. Identify the irrelevant cost in this problem. Why? 2. Which alternative should be chosen: sell as is or recondition. Why? 3. What is the opportunity cost of reconditioning the goods. Why?
ANNA Company purchased inventories from abroad for resale incurring the following costs: Determine the cost to be capitalized as part of inventory. 2. ROSALINDA Company accepted a special manufacturing order from RIZZA Company. The Company incurred P250,000 for materials and P170,000 for conversion costs. Since this is a special order, the Company also incurred P100,000 for designing the product and P50,000 for modifying the current production process. In addition, excessive wastage of materials amounting to P80,000 was incurred because of the highly-specialized nature of the order. Lastly, the Company also incurred storage cost of P70,000 when the inventory was in work-in-process stage and P40,000 when it was already a finished product. What amount should be capitalized as part of inventory?
A company purchases a 7,920-square-foot building for $410,000. The building has two separate rental units. Unit A, which has the desirable location on the corner and contains 1,620 square feet, will be rented for $2.00 per square foot. Unit B contains 6,300 square feet and will be rented for $1.20 per square foot. How much of the joint cost should be allocated to Unit A and to Unit B using the value basis of allocation?
A company purchases a 20,040-square-foot building for $750,000. The building has two separate rental units. Unit A, which has the desirable location on the corner and contains 6,680 square feet, will be rented for $2.00 per square foot. Unit B contains 13,360 square feet and will be rented for $1.50 per square foot. Compute the amount of joint cost that should be allocated to Unit B using the value basis of allocation: Multiple Choice $300,000 $487,500 $500,000 $600,000. $450,000
Mott Company purchases a machine from Janelle Company. Installation of the machine requires specialized knowledge that Mott Company does not possess. Janelle Company regularly includes installation as part of its sales contracts. The machine has a stand-alone price of $50,000, and the value of the installation is estimated to be $5,000. Mott agrees to purchase the machine for $50,000. How much of the contract price should be allocated to the machine and installation respectively?
Remerowski Corporation Inc. asks you to estimate the cost to purchase a new piece of production equipment. The company purchased this same type of equipment in the past for $8500. The original equipment had a capacity of 1500 units, while the new equipment has a capacity of 900 units. The power-sizing exponent for this type of equipment is 0.3. In addition, the cost index for this type of equipment was 111 when the original unit was purchased and is now 195. If Remerowski uses an 8% annual interest rate to evaluate equipment purchases, estimate the cost to purchase the new piece.
Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $218,252. Focus Company initially offered to buy the land for $179,248. The companies settled on a purchase price of $207,236. On the same day, another piece of land on the same block sold for $231,763. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company
Whole Grain Bakery purchases an industrial bread machine for $30,000. In addition to the purchase price, the company makes the following expenditures: freight, $2,000; installation, $4,000; testing, $1,500; and property tax on the machine for the first year, $600. What is the initial cost of the bread machine?
CH Kilo Inc. is evaluating a proposal to supply warehouse space to a potential customer as well as maintain all the required warehouse records. Kilo has a storage barn not currently in use; however, it will require the installation of additional shelving and a special concrete pad for delivery truck access Kilo's existing accountant will assume the additional accounting duties and receive an additional $8,000 per annum. The potential customer will pay a fee to Kilo based on the volume of product stored. Required: Which of the following items is not a relevant consideration in deciding whether Kilo should provide the warehouse space to the potential customer? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer, Any boxes left with a question mark will be automatically graded as incorrect.) Original purchase price of the storegeben…
Lemon Company signed a contract charging a customer P600,000 to change the windows of a customer's house. The contract includes costs for materials and labor. The company would charge P250,000 for materials if sold separately and P500,000 for labor if the customer will purchase the needed materials. How much of the transaction price woukd the company allocate to its performacne obligation to provide the needed services to the customer?
Meeker Inc. trades its used machine for a new model at Grand Inc. The used machine has a book value of $8,000 (original cost of $12,000) and a fair value of $4,000. The new model lists for $15,000. Meeker gives Grand a trade-in allowance of $7,000 for the used machine, $3,000 more than its fair value. Prepare a journal entry for Meeker, assuming commercial substance.