Identify those that should be included in the cost of the asset. (a) Freight charges, (b) sales tax on the machine, (c) payment to a passing motorist whose car was damaged by the equipment used in unloading the machine, (d) wages of employees for time spent in installing and testing the machine before it was placed in service, (e) wages of employees assigned to lubricate and make minor adjustments to the machine one year after it was placed in service

Identify those that should be included in the cost of the asset. (a) Freight charges, (b) sales tax on the machine, (c) payment to a passing motorist whose car was damaged by the equipment used in unloading the machine, (d) wages of employees for time spent in installing and testing the machine before it was placed in service, (e) wages of employees assigned to lubricate and make minor adjustments to the machine one year after it was placed in service

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 23P

See similar textbooks

Related questions

Q: Presented below is a list of items that could be included in the intangible assets section of the…

A: a. Indicate the items on the list given that would generally be reported as intangible assets in…

Q: As you have seen in Chapter 17, companies depreciate, or write off, the expense of tangible assets…

A: To calculate the annual amortization expense using the straight-line method, we first need to…

Q: Company B has acquired a t relating to the introduction c manufacturing process. The incurred were…

A: Intangible assets: Intangible assets are those which does not have any physical existence but have…

Q: When a company purchases land with a building on it and immediately tears down thebuilding so that…

A: There are various types of assets purchased by a firm in order to use them in the business…

Q: Kirsh Corporation purchased land as a factory site and contracted with Heathercote Construction to…

A: Assets: An asset is a resource which have some future economic benefit that an individual or…

Q: During the current year, Arkells Inc. made the following expenditures relating to plant machinery. •…

A: Capital Expenses are costs that are incurred to acquire or improve a long-term asset. Capital…

Q: The following are capital expenditures EXCEPT the decoration of office space installation of an…

A: Capital expenditure indicates the cost incurred by the company on their fixed assets which provides…

Q: Payment of an invoice for advertising 3 Costs of clearing the site ready for an extension to…

A: Capital expenditure are those expenditure whose benefit or use is enjoyed for a longer period say…

Q: 032

A: Particular Amount Gross invoice $54,400 Sale tax $3,520 Cash discount ($1,088) Freight…

Q: Estimate the average total estimated useful life of depreciable property, plant, and equipment. Does…

A: Plant, property and Equipment refers to the tangible asset of the firm. Any tangible asset have a…

Q: Prepare the necessary general journal entries, if any, to revalue the building and the equipment as…

A: Revaluation of Building & Equipment is considered as a change in accounting estimate &…

Q: Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000…

A: A special revenue fund is defined as a type of fund set up for the purpose of using the money for…

Q: The following data relate to a firm's purchase of a machine used in the manufacture of its product:…

A: Acquisition Cost:The initial cost of property, plant and equipment and the intangible assets that…

Q: capital expenditure or a revenue expenditure.

A: Answer – Capital expenditures are those expenditure which improves the performance of assets and…

Q: New Co. received a patent on a new type of machine. The legal costs and the patent application costs…

A: Meaning: Patent costs include legal and filing fees necessary to acquire a patent. Such costs are…

Q: Which of the following statements is (are) correct?a. Accumulated depreciation represents a cash…

A: Depreciation: Depreciation is the process of reduction in the cost of Asset due to use and wear and…

Question

100%

The following expenditures were incurred in connection with a new machine acquired by a metals manufacturing company.
Identify those that should be included in the cost of the asset.
(a) Freight charges, (b) sales tax on the machine, (c) payment to a passing motorist whose
car was damaged by the equipment used in unloading the machine, (d) wages of employees for time spent in installing and testing the machine before it was placed in service, (e) wages of employees assigned to lubricate and make
minor adjustments to the machine one year after it was placed in service

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Which of the following would be considered capital expenditures (debit to an asset)? Sales tax on the purchase of equipment Purchase of cleaning supplies to clean the company's microwave A special concrete foundation that was poured specifically for a new piece of equipment Installation costs for installing a new piece of equipment General maintenance costs for a piece of equipment that has been in service for ten years Routine oil change for a van Repair of damage incurred on a new piece of equipment while the new equipment was being brought into the company's office Attorney's fees incurred to review the purchase agreement for a new piece of equipment Installation of a parking lot around a retail buildling Freight costs for the delivery of a purchased used printing press
Explain what impact these errors would have hadover the last year and how you will correct them so you can prepare accurate financial statements.Expenditures:• Normal repair and maintenance on the manufacturing facility were capitalized.• The cost of taxes on new equipment used in business operations was expensed.• The shipping costs on new equipment used in business operations were expensed.• The cost of a minor repair on existing equipment used in business operations was capitalized.Assets:• Land next to the production facility held for use next year as a place to build a warehouse wasdepreciated.• Land held for future resale when the value increases was classified as Property, Plant, andEquipment but not depreciated.• Equipment used in the production process was classified as an investment.
Columbia Company incurred the following expenditures related to the land and building: Payment for land and old building 1,750,000 Demolition of old building to prepare the land for the construction of a new building 87,500 Payment to tenants for vacating old building 26,250 Building permit for new construction 52,500 Surveying fee before construction of new building 35,000 Parking lots and driveways (part of building plan) 70,000 Cost of grading, leveling and landfill 78,750 Assessment by city for drainage project 8,750 Construction costs of new building 10,500,000 Temporary quarters for…
Identify which of the following expenditures is considered as a capital expenditure that must be capitalized (depreciated):(a) Purchase land to build a warehouse at $300,000.(b) Purchased a copy machine at $15,000.(c) Installed a conveyor system at a cost of $55,000 to automate some part of production processes.(d) Painted the office building, both interior and exterior, at a cost of $22,000.( e) Repaved the parking lot at a cost of $25,000.(f) Installed a purified water fountain in the employee lounge at a cost of$3,000.(g) Purchased a spare part for a stamping machine at a cost of $3,800.(h) Paid $12,000 to lease a dump truck for six months.(i) Purchased a patent on an energy-saving device over five years at a cost of $30,000.
Indicate whether each of the following expenditures should be classified as land, land improvements, buildings, equipment, or none of these. 1. 2. Parking lots Electricity used by a machine 3. Excavation costs 4. Interest on building construction loan 5. Cost of trial runs for machinery 6. Drainage costs 7. Cost to install a machine 8. Fences 9. Unpaid (past) property taxes assumed 10. Cost of tearing down a building when land and a building on it are purchased
The following would be non-deductible capital expenditure: (a.) The investment banker fees incurred in a hostile take-over (b.) The cost of fixing a leaky copper pipe in an office building. (c.) The cost of removing asbestos and re-insulating an entire office building (d.) The cost of paper supplies used in a law office.
When an entity purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building shall be Expensed as incurred Amortized over the estimated time period between the tearing down of the building and the completion of the plant Added to the cost of the land Added to the cost of the plant
IBM, the large computer equipment and services company, stated in one of its annual reports that “Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method.” What estimates are necessary to carry out this policy? What factors should be considered in making each of the estimates?
On July 1, 2024, Jekel & Hyde Incorporated purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below: Purchase price Title insurance Legal fees to purchase land cost of razing old building on lot Proceeds from sale of salvageable materials. Property taxes, January 1, 2024-June 30, 2024 cost of grading and filling building site Cost of building construction Interest on construction loan cost of constructing driveway cost of parking lot and fencing $ 200,000 $ 3,000 $ 2,500 11,500 (2,700) 4,500 10,500 Land Building Land improvements 635,000 13,500 9,500 13,500 Required: Indicate the accounts that would be affected by the above transactions and the resulting balance in each account. Apply the interest on the construction loan to the cost of the building only.
Western Wholesale Foods incurs the following expenditures during the current fiscal year. How should Western account for each of these expenditures? Capitalize and depreciate over the useful life of the asset. OR Expense in the period incurred. 1. Salaries for the repair technicians, $154,000 2. Remodeling of the executive offices, $84,700 3. Annual maintenance costs related to its machinery, $70,400 4. Improvement of the production line resulting in an increase in productivity, $33,800 5. Addition of a sprinkler system to the manufacturing facility to reduce the risk of fire damage, $37,900
Oaktree Company purchased new equipment and made the following expenditures: Purchase price Sales tax Freight charges for shipment of equipment Insurance on the equipment for the first year Installation of equipment The equipment, including sales tax, was purchased on open account, with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Prepare the necessary journal entries to record the above expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet
ABC Inc., purchased a used piece of heavy equipment for $25,000. Delivery of the equipment to Padre’s business site cost $750. Expenditures to recondition the equipment and prepare it for use totaled $2,230. Determine the total cost of the Asset