Land purchase Demolition of old building Legal fees for land acquisition Avoidable interest on loan for construction $22,000 3,000 1,500 2,900 53,000 1,200 3,500 18,800 15,000 1,000 12,000 3,000 7,500 2,500 Building construction Assessment by city for sewer connection-city is responsible for maintenance Landscaping (expected to be permanent in nature) Equipment purchased for excavation Pro rata portion of fixed overhead incurred during construction of building Insurance on building during construction Profit on construction Compensation for injury to construction worker (not covered by the insurance policy purchased by Mawn) Modifications to building ordered by building inspectors (due to poor planning by Mawn) Delinquent property taxes on land paid in 2019 (land was purchased during the year)

Land purchase Demolition of old building Legal fees for land acquisition Avoidable interest on loan for construction $22,000 3,000 1,500 2,900 53,000 1,200 3,500 18,800 15,000 1,000 12,000 3,000 7,500 2,500 Building construction Assessment by city for sewer connection-city is responsible for maintenance Landscaping (expected to be permanent in nature) Equipment purchased for excavation Pro rata portion of fixed overhead incurred during construction of building Insurance on building during construction Profit on construction Compensation for injury to construction worker (not covered by the insurance policy purchased by Mawn) Modifications to building ordered by building inspectors (due to poor planning by Mawn) Delinquent property taxes on land paid in 2019 (land was purchased during the year)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

TGIF Company owned a building on January 01, 2019, with historical cost of 52,000,000. The property is depreciated over 40 years on a straight-line basis with no residual value. The entity adopted a policy of revaluation of property. The building had so far been revalued twice at fair value. The fair values of the building are as follows: January 01, 2020 : 60,840,000 January 01, 2022 : 72,150,000.How much is the revaluation surplus to be reported in the statement of changes in equity for the year ended December 31, 2022? a. 23,660,000 b. 23,400,000 c. 24,050,000 d. 24,570,000
McClain Company incurred the following expenditures during 2019: Apr. 9 The air conditioning system in the old manufacturing facility was replaced for $85,500. The old air conditioning system had a cost of $73,750 and a book value of $1,900. The old air conditioning system had no scrap value. June 29 Annual maintenance of $37,000 was performed. Sept. 12 The roof of the old manufacturing facility is replaced at a cost of $64,250. This expenditure substantially extended the life of the facility. Dec. 28 A new wing was added to the manufacturing facility at a cost of $265,000. This expenditure substantially increased the productive capacity of the plant. Required: 1. Prepare journal entries to record McClain’s expenditures for 2019. 2. Next Level What is the effect on the financial statements if management had improperly accounted for the: a. addition of the new wing to the manufacturing facility b. annual maintenance expenditures CHART OF…
In 2019, A.M.E. Corporation's accountant incorrectly expensed the cost of a major repairs to one of its equipment. The repairs would prolong the life of the asset beyond its current estimated useful life. Which of the following is (are) true? Question 18 options: Income in 2019 is understated. Income in future years is overstated. Corporation's assets in 2019 will be understated. All of these answer choices are true
The Laura Company has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed. a. In 2020, fully depreciated equipment (with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment. b. On January 1, 2019, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. (Ignore depreciation.) Required: Prepare journal entries to correct these errors at December 31, 2020. Ignore income taxes.
On March 31, 2021, Susquehanna Insurance purchased an office building for $10,200,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased separately from office equipment on the same date for $1,300,000 and $800,000, respectively. The company uses the straight-line method to depreciate its buildings and the double-declining-balance method to depreciate all other depreciable assets. The estimated useful lives and residual values of these assets are as follows: ServiceLife ResidualValue Building 25 5% of cost Furniture and fixtures 10 5% of cost Office equipment 5 $40,000 Required:Calculate depreciation for 2021 and 2022.
On December 31, 2022, Delater Enterprises must measure its impairment loss for plant and equipment. Delater has determined that the broadcast license is not impaired. The projected future undiscounted cash flows, projected future discounted cash flows, and fair values of the plant and equipment are listed below: (Click the icon to view the cash flows and fair values.) Determine the impairment loss and the revised annual depreciation expense. Prepare any necessary journal entries to record the impairment. Begin by computing the impairment loss for the plant and equipment. (Use a minus sign or par Plant and Equipment Carrying value Less: Fair value Impairment Loss Next, prepare the journal entry necessary to record the impairment. (Record debits first, then c December 31, 2022 2,145,000 915,000 $ (2,145,000) 1,230,000 $ (915,000) Account Accumulated Depreciation Plant and Equipment Impairment Loss on Plant and Equipment Plant and Equipment Determine the revised annual depreciation…
Ivanhoe Ltd. purchased a piece of equipment on January 1, 2019, for $1,275,000. At that time, it was estimated that the mad would have a 15-year life and no residual value. On December 31, 2023, Ivanhoe's controller found that the entry for depreciation expense was omitted in error in 2020. In addition, Ivanhoe planned to switch to double-declining-balance depreciation beca change in the pattern of benefits received, starting with the year 2023. Ivanhoe currently uses the straight-line method for depreciating equipment. Ivanhoe Ltd. follows IFRS.
Wildhorse Co. purchased machinery that cost $2850000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a 9-year life and a $185000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations.Wildhorse's income statement for the year ended December 31, 2021, should show the cumulative effect of this error in the amount of
Please, not answered with the same person ABC Company obtained a patent in January 2019, at a cost of $ 200.000 Estimated useful life 8 year. The company incurred additional costs related to this patent in January 2020, amounting to $ 20.000 At the end of 2021 there was an economic downturn due to the pandemic, and a test for impairment of the fair value of in assets was carried out according to an independent appraiser, the recoverable value of the patent is $ 24,000. Instructions: Make journals at the end of 2019 to 2021
At the beginning of 2021, Westglow Company purchased equipment for $525,000 that was assigned an estimated useful life of 5 years and an estimated salvage value of $50,000. The company uses straight-line depreciation for all of its plant and equipment. When preparing adjusting entries at December 31, 2024, it was discovered that the bookkeeper had failed to deduct the salvage value in computing the depreciation base for 2021, 2022, and 2023. Westglow issues 2-year comparative financial statements. Which of the following statements describes the procedure that should be followed at December 31, 2024? Answer a. Westglow should compute the amount of annual depreciation expense that should have been recorded for 2023 and adjust accumulated depreciation and depreciation expense for the difference. The financial statements for 2023 should be restated and the effect of the error should be reported as an adjustment to the beginning balance of retained earnings for 2024. b.…
Do not give answer in image
On December 31, 2019, Aquinas Company had equipment that had a carrying amount of $300,000 which the company wrote down to its $250,000 fair value. At the end of 2020 it was determined that the fair value of the equipment had risen to $320,000. At December 31, 2020, assuming Aquinas does not intend to dispose of the equipment, how should Aquinas record the change in fair value of the equipment? A. The carrying amount of the equipment should not change except for the depreciation taken in 2020. B. The equipment should reflect the new cost basis of $300,000. C. The equipment should reflect the new cost basis of $320,000. D. The equipment should reflect the new cost basis of $270,000.