Martinez Company owns a building that appears on its prior year-end balance sheet at its original $730,000 cost less $547,500accumulated depreciation. The building is depreciated on a straight-line basis assuming a 20-year life and no salvage value. Duringthe first week in January of the current calendar year, major structural repairs are completed on the building at a $73,000 cost. Therepairs extend its useful life for 5 years beyond the 20 years originally estimated.1. Determine the building's age (plant asset age) as of the prior year-end balance sheet date.2. Prepare the entry to record the cost of the structural repairs that are paid in cash.3. Determine the book value of the building immediately after the repairs are recorded.4. Prepare the entry to record the current calendar year's depreciation.

Final answer is as foloows:Explanation:1. Building's Age (Plant Asset Age):We can use the…

Answered: Martinez Company owns a building that…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bailand Company purchased a building for $286,000 that had an estimated residual value of $6,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur:1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years).2. Bailand changes to the sum-of-the-years’-digits method.3. Bailand discovers that the estimated residual value has been ignored in the computation of depreciation expense. 1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years). Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in estimate. Ignore income taxes.
A permanent steel building used for the overhaul of dewatering systems (engines, pumps, and wellpoints) is placed in service on July 10 by a calendar-year taxpayer for $260,000. It is sold almost 5 years later on May 15. A) What is the MACRS-GDS property class? B) Determine the depreciation deduction during each of the years involved. C) Determine the unrecovered investment during each of the years involved.
Zorzi Company purchased a machine on July 1, 2018, for $28.000. Zorzi paid $200 in title fees and county property tax of $125 on the machine In addition, Zorzi paid $500 shipping charges for delivery and $475 was paid to a local contractor to build and wire a platform for the machine on the plant floor The machine has an estimated useful life of 6 years with a salvage value of $3.000 Determine the depreciation base of Zorzis new machine. Zorzi uses straight-line depreciation. $25,000 $26.000 $26 300 None of the above
Colquhoun International purchases a warehouse for $325,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. A. Calculate annual depreciation expense for the first four years. $fill in the blank b2a4a0fccfb4fa2_1 B. Determine the depreciation expense for the final fifteen years of the asset’s life. $fill in the blank b2a4a0fccfb4fa2_2 C. Prepare the journal entry for year five. If an amount box does not require an entry, leave it blank.
Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $4,800. The cost of the building was $96,000. The current book value of the equipment (January 1, 2021) is $81,600. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2021, the company decided to reduce the original useful life by 25% and to establish a salvage value of $4,800. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects. 1. Prepare the journal entry, if any, to report the accounting change under GAAP. 2. Record the annual depreciation for 2021.
Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $45,700. The machine's useful life is estimated at 10 years, or 397,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 33,700 units of product. Determine the machine's second-year depreciation using the double-declining-balance method. First year's depreciation Second year's depreciation Double-declining-balance Depreciation Choose Factors: Choose Factor (%) = = = = Annual Depreciation Expense Depreciation expense
On January 1, Year 2, Webb Construction Company overhauled four cranes resulting in a slight increase in the life of the cranes. Such overhauls occur regularly at two-year intervals and have been treated as maintenance expense in the past. Management is considering whether to capitalize this year's $28,310 cash cost expense. Assume that the cranes have a remaining useful life of two years and no expected salvage value. Assume straight-line depreciation. the Cranes asset account or to expense it as a maintenance Required a. Determine the amount of additional depreciation expense Webb would recognize in Year 2 and Year 3 if the cost were capitalized in the Cranes account. b. Determine the amount of expense Webb would recognize in Year 2 and Year 3 if the cost were recognized as maintenance expense. c. Determine the effect of the overhaul on cash flow from operating activities for Year 2 and Year 3 if the cost were capitalized and expensed through depreciation charges. (Cash outflows…
The Bandor Group sold one of its plant assets on June 1 of the current year for $70,000. The asset had an original cost of $300,900 and an estimated residual value of $9,000. The firm used the straight-line method of depreciation assuming an estimated useful life of 7 years. The asset was in service for 5 years as of January 1 of the current year. Read the requirements Requirement a. Prepare the journal entry required to record the depreciation for the current year. (Record debits first, then credits. Exclude explanations from any journal entries) Account Depreciation Expense-Plant Asset Accumulated Depreciation-Plant Asset June 1 Requirement b. Prepare the journal entry required to record the sale of the asset. (Record debits first, then credits Exclude explanations from any journal entries.) Account June 1 Cash Accumulated Depreciation Plant Asset Loss on Sale of Plant Assets
Martinez Company owns a building that appears on its prior year-end balance sheet at its original $572,000 cost less $429,000 accumulated depreciation. The building is depreciated on a straight-line basis assuming a 20-year life and no salvage value. During the first week in January of the current calendar year, major structural repairs are completed on the building at a $68,350 cost. The repairs extend its useful life for 5 years beyond the 20 years originally estimated. 1. Determine the building's age (plant asset age) as of the prior year-end balance sheet date. 2. Prepare the entry to record the cost of the structural repairs that are paid in cash. 3. Determine the book value of the building immediately after the repairs are recorded. 4. Prepare the entry to record the current calendar year's depreciation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the building's age (plant asset age) as of the prior…
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Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $840,000. The machine's useful life is estimated at ten years, with a $75,600 salvage value. Determine this expensive machine's depreciation expense for each of the first 3 years under the double-declining balance method. Note: Round your answers to the nearest dollar. Annual Period First Year Second Year Third Year Depreciation for the Period Beginning of Period Book Value End of Period Depreciation Depreciation Accumulated Rate (%) Expense Depreciation Book Value
On the indirect statement of cash flows, $500,000 relating to notes payable was subtracted from net income to get indirect cash flow from operations. This must mean that: Notes payable were $500,000 at the beginning of the year. O Notes payable were $500,000 at the end of the year. Incorrect. Notes payable increased by $500.000 over the year. Notes payable decreased by $500,000 over the year.

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