Kemp Inc. acquired a new processing machine: Invoice cost P1,800,000 Transportation cost Installation cost 50,000 120,000 The purchase agreement stipulated that if payment is made within 10 days, the entity will receive a 5% discount. However, the entity paid after the discount time had expired. The new entity's main engineer spent two-thirds of his time on the new machine's trial run. The remuneration is P90,000 per month. The company requested for an allowance from the supplier since the machine's performance was below par. A cash allowance of P100,000 was issued by the supplier. The cost of uninstalling the old machine before installing the new unit was P10,000. a. P1,800,000 b. P1,840,000 c. P1,870,000 d. P1,780,000

Kemp Inc. acquired a new processing machine: Invoice cost P1,800,000 Transportation cost Installation cost 50,000 120,000 The purchase agreement stipulated that if payment is made within 10 days, the entity will receive a 5% discount. However, the entity paid after the discount time had expired. The new entity's main engineer spent two-thirds of his time on the new machine's trial run. The remuneration is P90,000 per month. The company requested for an allowance from the supplier since the machine's performance was below par. A cash allowance of P100,000 was issued by the supplier. The cost of uninstalling the old machine before installing the new unit was P10,000. a. P1,800,000 b. P1,840,000 c. P1,870,000 d. P1,780,000

Name: Kemp Inc. acquired a new processing machine:P1,800,000Invoice costTra
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Kemp Inc. acquired a new processing machine:P1,800,000Invoice costTransportation cost50,000Installation cost120,000The purchase agreement stipulated that if payment is made within 10 days, the entity will receive a 5%discount. However, the entity pa

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a…

A: The total amount spent on an item plus the costs associated with using it is known as the asset's…

Q: Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a…

A: The capitalized cost of an asset consists of the acquisition cost of the asset and other costs are…

Q: Covidam Company clinches a contract to supply cleaning services to a nursing home for the next 5…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a…

A: Cost of asset is the amount paid for an asset and for expenses incurred in putting the asset in…

Q: OnJanuary 3,2020,GagneInc. paid $320,000 for a computer system. In addition to the basic purchase…

A: Depreciation refers to the accounting concept which results in decrease in the value of the asset…

Q: ABC, Inc. purchased an equipment at time=0 for $135,077. The shipping and installation costs were…

A: Calculation of Cash Flow in Year 4:The cash flow in year 4 is $123,123.96.Excel Spreadsheet:

Q: On January 1, 20x6, BUNNY, a real estate company, entered into a contract to construct a subdivision…

A: Answer - Given, Estimated total cost of contract for the 10 houses = P40M. In CY 20x6, total…

Q: Steele Corp. purchases equipment for $21,000. Regarding the purchase, Steele recorded the following…

A: Acquisition cost is cost incurred to put the asset in to use Maintenance costs are not capitalized…

Q: Sunland Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases…

A: For the lessee, a sales-type lease might function as a type of asset finance. The lessee can…

Q: A construction company enters a long-term contract with a customer. The contract price is…

A: Contract accounting means where the contract to build something for the customer will take more…

Q: VC purchased a machine for use in operations at a quoted price of $35,120. Full payment was cash of…

A: Fixed assets are those assets which are being held in business for longer period of time. These…

Q: A small industrial contractor purchased a warehouse building for storing equipment and materials…

A: Balloon payment is the outstanding balance of the loan at the end of 5 years.

Q: The transaction price allocated to the pool and the installation is

A: Cost allocation refers to the process which is used by the company to allocate the cost of product…

Q: Sloan Corporation is considering new equipment. The equipment can be purchased from an overseas…

A: Differential analysis is the comparison between two options with respect to cost and revenue which…

Q: Gilroy Corporation is considering new equipment. The equipment can be purchased from an overseas…

A: Differential analysis: Differential analysis refers to the analysis of differential revenue that…

Q: On March 17, Advanced Technologies purchased a patent related to laser surgery techniques. The…

A: IntroductionAdvanced Technologies:A technology that is either technically developed but has just a…

Q: Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following…

A: Total cost of equipment includes all those expenses which are incurred to make equipment ready to…

Q: Tullis Construction enters into a long-term fixed price contract to build an office tower for…

A: The construction contract is a long-term contract that generally takes more than a year to finish…

Q: Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a…

A: Capitalization refers to an amount that is incurred in the long-term debt, stock, and retained…

Q: Compute the amount of each of the following items. (Round present value factor calculations to 5…

A: Manufacturer Lessor:Manufacturers or dealers frequently provide customers with the option of either…

Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

Kemp Inc. acquired a new processing machine:
P1,800,000
Invoice cost
Transportation cost
50,000
Installation cost
120,000
The purchase agreement stipulated that if payment is made within 10 days, the entity will receive a 5%
discount. However, the entity paid after the discount time had expired.
The new entity's main engineer spent two-thirds of his time on the new machine's trial run. The
remuneration is P90,000 per month.
The company requested for an allowance from the supplier since the machine's performance was below
par. A cash allowance of P100,000 was issued by the supplier.
The cost of uninstalling the old machine before installing the new unit was P10,000.
a. P1,800,000
b. P1,840,000
c. P1,870,000
d. P1,780,000

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

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

On March 17, Advanced Technologies purchased a patent related to laser surgery techniques. The purchase price of the patent is $1,340,000. The patent is expected to benefit the company for the next five years. The company had the following additional costs: $34,000 in legal fees associated with the purchase and filling of the patent, $49,000 to advertise its new laser surgery techniques, and $59,000 to train employees. None of these additional costs were included in the purchase price or paid to the seller. Now assume that instead of purchasing the patent, Advanced Technologies spent $1,340,000 to develop the patent internally, consisting of personnel ($870,000), equipment ($342,000), and materials ($128,000). All additional costs were incurred for the same amount. What is the recorded cost of the patent? Total capitalized cost
teele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following transactions: • Paid shipping of $1,000• Paid installation fees of $2,000• Pays annual maintenance cost of $200• Received a 5% discount on $25,000 sales price Determine the acquisition cost of the equipment.
Steele Corp. purchases equipment for $20,000. Regarding the purchase, Steele recorded the following transactions: • Paid shipping of $900. • Paid installation fees of $1,800. • Pays annual maintenance cost of $280. • Received a 5% discount on $20,000 sales price. Determine the acquisition cost of the equipment.
Steele Corp. purchases equipment for $20,000. Regarding the purchase, Steele recorded the following transactions: • Paid shipping of $800. • Paid installation fees of $1,600. Pays annual maintenance cost of $240. • Received a 5% discount on $20,000 sales price. Determine the acquisition cost of the equipment.
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $124,960. The seller agreed to allow a 5.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,820. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $870. The loader operator is paid an annual salary of $15,500. The cost of the.company's theft insurance policy increased by $2,320 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $7,600. Required Determine the amount to be capitalized in the asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costs
The Titanic Shipbuilding Company has a noncancelable contract to build a small cargo vessel. Construction involves a cash outlay of $270,000 at the end of each of the next two years. At the end of the third year, the company will receive payment of $620,000. The company can speed up construction by working an extra shift. In this case, there will be a cash outlay of $584,000 at the end of the first year followed by a cash payment of $620,000 at the end of the second year. Use the IRR rule to show the (approximate) range of opportunity costs of capital at which the company should work the extra shift. Note: Enter your answers as a percent rounded to 2 decimal places. Enter the smallest percent first. The company should work the extra shift if the cost of capital is between % and %.
Los Altos, Inc. obtained a patent for a new optical scanning device. The fees incurred to file for the patent and to defend the patent in court against several companies that challenged the patent amounted to $45,000. Los Altos, Inc. concluded that the expected economic life of the patent was 12 years. Calculate the amortization expense that should be recorded in the second year. $ 0
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $115,370. The seller agreed to allow a 6.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,080. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $1,150. The loader operator is paid an annual salary of $11,910. The cost of the company's theft insurance policy increased by $2,090 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $9,900. Required: Determine the amount to be capitalized in an asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costs
Banco Company acquired a new machine on a delayed payment basis on August 1, 2018. A down payment of P100,000 was made, with four monthly instalments of P250,000 to commence on September 1, 2018. The machine's cash equivalent price was P 950 000. The entity spent and paid P 30 000 in installation fees. What is the sum to be capitalised as the machine's cost?
Covidam Company clinches a contract to supply cleaning services to a nursing home for the next 5 years. Under the contract, the Company will be paid $1 million a year. To take up this contract, it would have to invest in new cleaning equipment costing $600,000 which will be depreciated straight line to zero over 5 years. There is no salvage value at the end of 5 years. Labour cost will be $300,000 per year and overheads $250,000per year. The Company will need to invest in net working capital of $350,000. It plans to issue $1 million worth of bonds for 5 years at a coupon rate of 6% and will price the bonds at par. The Company has an existing bank loan of $9 million. The cost of debt from the bank loan is the same as the bonds. The common stock of the Company is selling for $10 per share and it has 2 million shares outstanding. Expected dividend next year is $1 per share and dividends are expected to grow at 2% per annum into the foreseeable future. The tax rate is 20%.(a) Determine the…
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $117,890. The seller agreed to allow a 5.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,680. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $770. The loader operator is paid an annual salary of $28,360. The cost of the company's theft insurance policy increased by $1,940 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $6,100. Required: Determine the amount to be capitalized in an asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costs $ 0
OnJanuary 3,2020,GagneInc. paid $320,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of$2,500,$6,400sales tax, and $21,100 for special installation. Management estimates that the computer will remain in service for five years and have a residual value of $20,000.The computer will process 50,000 documents the first year, decreasing annually by 5,000 during each of the next four years (that is 45,000 documents in 2021,40,000 documents is 2022, and so on). In trying to decide which depreciation method to use, the company president has requested a depreciation schedule for each of three depreciation methods (straight-line, units-of-production, and double-diminishing-balance). 1.Before completing the straight-line depreciation schedule, calculate the straight-line depreciation rate. First, select the labels for the formula and then compute the rate. (Round the rate to two decimal places.) 2. Complete the…